Last Friday's COT report showed a fairly large build in new longs among the hedge fund community. Unfortunately for them, those new longs BOUGHT HIGH and ended up SELLING LOW; not a particular good way to impress their clients.
Nearly all of those new longs were immediately under water as soon as the FOMC issued its statement last week. That and the fact that WWIII did not break out, as many of the perma gold bugs were predicting, was enough to turn the momentum back and that did it for the momentum-based funds. They are now selling.
In looking at the Daily Chart, it has now turned negative once again with the loss of downside support near $1320. Gold has currently encountered a bit of buying support at the 38.2% Fibonacci retracement level from the $1180 low to the recent high shy of $1400. Failure to hold here, and a test of PSYCHOLOGICAL support ( there is nothing as far as Technical chart support about this level ) at the $1300 will be shortly in order.
If that is not enough to bring in dip buyers, then the next logical chart level that I can see is closer to $1287.
The ADX turned down last week suggesting a halt in the recent uptrend. That has certainly been confirmed with the crossover by the Directional Movement Lines. The Bears have now seized control of the market once again. We will have to see whether or not the Bulls can seize it back again but they are going to have to resurface very, very soon and at a bare minimum recapture $1340 - $1345 to run out some of the new shorts.
If you notice, the short-term uptrend line has also been broken.
Silver is actually holding up better than gold today as it thus far seems reluctant to move below $20 for any length of time. It might be drawing some stability from the fairly steady copper market.
Mining shares are of no help whatsoever to the entire metals complex at this point. There is a zone of congestion on the HUI chart between 210 - 220. That index looks like it is headed there. So far the miners are down nearly 4% today.
By the way, bonds are getting some money flows into them today. Interest rates have dropped a wee bit on the Ten Year to 2.737 as I type these comments.
No much else to say except the week has started off poorly for gold bulls. Maybe it will end better.
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Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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