Now is it just me, or does it seem sort of odd that one would announce ahead of time
plans to sell a bunch of gold? Wouldn't the mere mention of the fact cause prices to
drop, thereby making the sale less lucrative? Oh well, apparently the British felt it
necessary to tell the whole world, and that has depressed prices over $15 in just two
sessions! There was lots of food feeding the bears now...IMF gold sales looming over
the market, the Swiss taking a step towards selling some of their gold, and now the
U.K. says they are selling gold. On top of this, the COT from Friday revealed funds
have reduced their short positions...meaning some covering (buying) already took
place. On the supply side of the equation, production of the yellow metal continues to
operate at seemingly full steam, thereby exacerbating the weak prices. So there you
have it...nobody, even Central Banks, wants to hang onto gold, and producers keep
producing...not a very favorable outlook for the bulls at the moment. However,
remember that just as much money can be made (or lost) from the short side of the
market. Last week, technicals in gold looked positive, but technicals can't account for
surprise announcements from foreign governments regarding gold sales. Downtrend
resistance in the 293 area held, and those who waited to buy on strength have been
able to avoid the dramatic decline. Even though gold broke out from an inverted head
and shoulders last week, the techncials could not account for the surprise selling
announcement, and prices are now at new contract lows.
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