Update: spot gold is currently resting right above one of the monthly trend lines so many people based their entry upon.
It is the less important of the 2 lines given how the markets reacted breaking them on the way up.
Here are updated charts showing where the 2 monthly trend lines come in. It might be a good area to cover shorts or buy if you are a scale in accumulator. Otherwise, we se people about to get chopped up on both sides of the market.
Friday's close came back to haunt us it seems. Spot did close under $1321 implying a quick and potentially large move lower with little bounce on the way down. The market has given us $7.00 of that move without touching the signal negation level. It has dropped in a more orderly fashion than expected however, which could augur end of a trend on the volatility system we use.
Friday's Posts giving us the alarm
While our risk reward post trade says to be out of a short here, a couple much large equity funds we speak with may have an eye on selling if we break $1300 in Dec futures. These are $BB hedge funds that "punt" in commodities once in a while. They are not big players in Gold, but if they are spec-ing a little, then others are dabbling as well. It helps to know the basis for their long positions, which is quite clear and simple.
Monthly Spot Gold
click graph for live interactive updates
- Gold monthly chart had crossed above 2 potentially watched trend lines last month
- Gold monthly is trading above its 12 month moving average
That is their basic criteria. They will risk $50 to make $250 and aren't risking a lot of money. But they are tip of iceberg we feel. How many more have also bought that area with leverage? WE have seen the marketing ratchet up at brokers commodity divisions as well? Here is one infographic for effect.
Long on the "Vibrate" Effect Squared? (Now THAT is Voodoo).
Did you buy on this chart? Lots of people did. The blue arrow told them to!
And as North Korean tensions de-escalate the impetus to be long as a hedge will dissipate. Which will just be one less reason, real or imagined, to not be long Gold. Even if you deride technical analysis as voodoo (it's not although we hate to admit it), if you do not acknowledge that others are taking it seriously, then you imperil yourself.
Gold could push lower towards those trend lines testing for stops. But these are monthly candles and it is where we close that matters. Some money could get stopped out of its "punt" plays, and then the market could stabilize above again. We do not know. But OI will change hands as we go lower, and we'd look to start thinking "long spec" only when the OI starts rising in a dropping market. Otherwise it is sell rallies before buying dips.
Plenty of Longs Remain
Note how the OI jumps on the monthly settlement above the trendline. Imagine that half of them hit the exit door at the same time
Lots of money bought supposedly long term on the break above the trend line, and that is legit. But lots of those buyers were not as long term as they think. And the break was legit as well. A vertical break above a downtrending line is powerful. This as opposed to a market that moves sideways through a downtrending line which is B.S. The point is it will be just as powerful if not more, the other way if we get through there. Like $1250 powerful if there aren't major commercials short who are waiting to cover just under $1300. Watch the OI if we get to $1300. We will be.
Just be really careful here- Soren K.
On Deck This Week
via investing.com - Gold prices started the week on the back foot on Monday, sliding to their lowest level since the end of August, as investors looked ahead to a Federal Reserve policy meeting for insights into the outlook for monetary policy.
Comex were at $1,320.02 a troy ounce by 3:40AM ET (0740GMT), down $5.30, or around 0.4%. It fell to its lowest since Aug. 31 at $1,318.48 earlier in the session.
The yellow metal lost nearly 2% last week, its first weekly decline in a month, as investor interest in riskier assets, such as stocks, found buying interest.
A key focus for markets this week is the Federal Reserve's two-day policy meeting that ends on Wednesday.
The Fed is widely expected to keep interest rates unchanged this week, but is likely to announce a plan to start shrinking its massive $4.5 trillion balance sheet in an effort to normalize policy.
Markets will also be looking for further clues on the timing of the next Fed rate hike, with of market players expecting a move by December, according to Investing.com's Fed Rate Monitor Tool.
Besides the Fed, developments on the Korean Peninsula are likely to continue attracting attention.
U.S. President Donald Trump referred to North Korean leader Kim Jong-Un as "Rocket Man" in a tweet on Sunday as other U.S. officials continued to reiterate that "all options" were on the table in dealing with the hermit state.
Trump is expected to address world leaders at the United Nations on Tuesday, where he is expected to seek support for tougher measures against Pyongyang.
Elsewhere on the Comex, inched down 9.3 cents, or about 0.5%, to $17.60 a troy ounce.
Among other precious metals, shed 0.2% to $969.50, while tacked on roughly 0.6% to $926.88 an ounce.
Read more by Soren K.Group