The incompetent bunglers (aka hedge funds), which came out buying everything in sight to start off the New Year have been mostly in the process of throwing all of that stuff away over the last two days proving that the advent of the New Year has not seen an improvement in the intelligence of that pack of pathetic traders. Seriously, this current crop of hedge funds contains some of the most ignorant and unskilled traders that I have ever personally witnessed over my entire two decades+ trading career. They seem to know little if anything about nibbling on markets or being cautious and scaling back in size. It is either, "All in" or "All out". Massive amounts of money are slingshotted into everything and then promptly jettisoned out. It seems to me that the only people making money in that environment are the brokers, who must love the commissions and the exchanges which are revelling in the huge fees that this constant churning is creating.
That brings us to gold, which has been able to hold very firmly above the $1,600 level. The longer it does, the more confident traders are becoming that the bottom is in and that the next trending move will be to the upside.
You will notice on the chart that the market has run right back up into the initial resistance level detailed near and just above the $1,620 level. Forays in price the last two trading days have seen any dips below $1,600 immediately attract buying which has taken price promptly back avove that level. The result is that some shorts are getting nervous and are beginning to cover. If the bulls can now mount a close above today's session high, it seems we are going to get a move towards psychological resistance at $1,650 with the potential to charge towards the second resistance line drawn in near $1670. That is where the real battle will shape up to see whether or not the stronger-handed bulls can contain it there or watch it run to $1,700.
