It has been nearly two weeks since we have had an updated report of what the current gold holdings are in the large gold ETF, GLD. We finally got one today.
The new number came in 4.2 tons below the last reported tonnage. GLD is now holding 782.88 tons.
That this is occurring against a backdrop of events in Iraq tells me that large traders/investors are using the current geopolitical rally in the yellow metal to sell.
I had remarked some three weeks ago that the first sizeable jump in gold holdings ( nearly 8.4 tons back on May 27th) was the first good news that gold has had in some time. What I wanted to see was whether or not this was the start of a new trend among Western-based investors or more or less a flash in the pan brought on by some value-based buying that was a one-off type of transaction.
From that point, GLD only added another 1.8 tons before today's fairly sizeable drop.
I do not think it coincidental that the drop occurred as gold hit a resistance zone on the price chart centered near the $1280 region. Obviously big sellers were lying in wait to take advantage of the short-lived spike in price set off by the running of buy stops in Asian trade Sunday evening here in the West.
I am noticing that crude oil is continuing to lose some ground this evening as is silver while the Dollar is firming up a tad. A lot can happen between now and European and New York trading on Tuesday but one gets the impression in watching the price action that traders are taking some of the "chaos" premium out of the metal (and the crude) as events in Iraq do not seem quite as dangerous for the immediate moment. That does not mean things over there are not a mess - what it means is that for now, ISIS has been stopped in its formerly unimpeded march south through the country and Baghdad looks to have been granted a reprieve.
With a situation like this however, events are fluid and can change rapidly but the fact that gold could not clear $1300 with what is happening in Iraq makes me wonder what exactly it will take on the geopolitical front to push the metal higher at this point.
In spite of all that is transpiring around us both domestically and globally, it seems like we keep coming back to the same theme - a lack of sustained inflation pressures in a positive real interest rate environment. Such has been the sentiment of traders for some time now. I am not sure what it will take to disabuse them of this notion.
Gold has continued support down near and just above the $1240 level and the resistance level near $1280 has been reinforced on the chart. It is currently back inside of this range.
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