FMX | Connect (Reported 9/29/2011)
December Gold settled at $1,617.30 per troy ounce, a loss of $.80 for the day.
Market Recap:
Gold traded lower in the overnight session before finding support on some U.S. economic numbers this morning. Initial jobless claims fell by 37,000 and 2nd-quarter U.S. GDP growth was revised up to 1.3%, an improvement on initial estimates of 1%. Despite the data and signs that Europe is getting closer to reinforcing the EFSF with additional funding, trading was choppy across the asset closes. For many, these glimmers of improvements do little to allay concerns of a continuing decline.
Gold was practically unchanged on the day, but volatility remained firm, a sign of heightened uncertainty and a symptom of the extended movements this market is experiencing. Puts and put spreads were bid in the front months, coalescing around the 1500 strike, and with interest all the way through the 1350 strike. Premium continued to bleed out from calls, moving fences toward the puts. Volume was light on the day, but this was mostly to be expected. The market temperament was much the same as it was yesterday.
Directional Commentary:
Options: The trend in options behavior remains strong despite subdued futures movement. Volatility and puts remain bid, while calls are being sold cheaper and cheaper. Options are reflecting strong concerns of a sharp sell-off and decreased expectations of a rally. Conclusion: Bearish
Technical: December Gold traded to 1585 on the lows before finishing the day slightly lower than unchanged. Technically, very little from yesterday has changed, all though it should be noted bullion could not break above resistance at the 100-day moving average. The high was 1637.90 and the average is 1639.30. This supports our bear stance: We expect gold to trade sideways to lower, eventually retesting the 200-day moving average near 1530 and a break below the 200-day moving average could prompt a truly violent sell-off all the way to the mid-1200s. Conclusion: Bearish |
