Thursday, December 29, 2011

Dec 29th Gold - wheres the bottom?

Gold was sold off again today which brought a close of ~$1546.  The $1575 area did not provide much support (Fib 23.6 retracement and May 2nd peak), but when you have more sellers than buyers, the price will drop below significant support levels.  Throw in price manipulation and you can throw technical analysis out the door.  If the players with hundreds of millions of dollars want to make money on the short side, they will push the market down, then eventually go long.  There may also be hedge funds selling to improve (and show) their profits for 2011.

Should the sell off continue, Gold may meet the July 1st low of ~$1478 which would be a 100% retracement of the move up during the summer. It's following the lower Bollinger Band to the downside and beneath the 20, 50, 100 and 200 day moving averages. (It is trading $75 below the 200 day moving average)

The MF Global fiasco may be influencing the futures markets in some way...?  If your a futures trader and know that your clearing firm can go bankrupt at any time, take all of the cash in your account, lock you out from your hedged positions for a week, confiscate your Gold / Silver, would you continue to trade in those markets?  And to top if off, the CME, CFTC and your Government will do nothing about it.

Gold is up about ~11.6% for the year which is better than most mutual funds and a savings account that is getting .05%.  The S&P 500 is up about .43% year to date. We may look back at this time and see that Gold was a good buying opportunity.

No comments:

Post a Comment