Gold has been subjected to a large synthetic (paper) generated parabolic move. All the talk about physical demand doing that was largely nonsense. It was speculative Riskloves and hedge funds pure and simple, and now you see what happens when an asset is highjacked by that crew. In fact open interest in synthetic or paper positions hit 506,000 on May 9th before the collapse. That's really been liquidated, as we are now we are down to around 290,000,
technicalindicators.com
which is about 80,000 less than just last week.
I will be very interested in seeing what the COTs spec position looks like Friday. Even if it's much more healthy, I just don't think there is a huge rush to get in, after a parabolic breakdown of this magnitude. The Riskloves just wouldn't plunge back in, unless the Wizards actually ended up pausing on June 28. That's why I think the Fed is locked into the necessity of a killer hike to 5.25%, to ensure that doesn't happen, and to try and discipline all Risklove trading in general. In fact, they really haven't gotten the job done in energy yet. Think they would be premature to start doing nanner nanner victory dances now, although I suspect they will later, when more fallout of the cure hits.
The 200 gold MA at about $542 might offer decent support, because there may be actual physical demand showing up. But often these technical levels are penetrated just to shake out more people. I suspect we may end up seeing up GLD liquidation as well.
Positive seasonals do start in early July, and again stronger in late August, so time to see how things shake out. |
