Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
Tips to Get Financing for a New Business - 24th Feb 18
Heavy Police Presence at Resumption of Sheffield Street Tree Fellings Protests - 24th Feb 18
Why You Should NOT Sub4Sub Free Youtube Subscribers - YTpals, Subpals, SubmeNow Test Results - 23rd Feb 18
One Belt, One Road, One Direction for Precious Metals - 23rd Feb 18
Gold’s Curious Sentiment - 23rd Feb 18
Relationship Between Crude Oil and U.S. Dollar in February 2018 - 23rd Feb 18
Why The Next Oil Boom Will Be Fueled By Blockchain - 23rd Feb 18
Gold Bull and Bear Markets - 23rd Feb 18
Why Recent Lows Are Crucial for US Dollar - 23rd Feb 18
Will Bitcoin be Larger Than NEO in 2018? - 23rd Feb 18
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

GLD Bleeds Out; Weekly Gold Update

Commodities / Gold and Silver 2016 Oct 22, 2016 - 05:40 PM GMT

By: Dan_Norcini

Commodities

The one factor that gold bulls have had going in their favor during the recent selloff that occurred in gold and the gold mining shares in this month of October, has been the stellar performance of the reported holdings in the gigantic gold ETF, GLD. It has held rock steady in spite of the carnage witnessed, especially in the mining shares, even as the US Dollar has turned strongly bullish on the technical price charts. It has been a point of solace among the bulls to be able to see the resolve of some of their large sponsors holding firm in GLD.


That came to an abrupt end this afternoon as the numbers were released and they are ugly.

In surprising fashion, given its stability for most of the month, it coughed up a bit over 16.6 tons of gold.

You can see the sharp drop on the chart.

The good thing is that it still has about 5.5 more tons of gold in it even after today’s sharp reduction than it did to start the month of October. Considering that gold itself has lost some $50 over the same time period, that has to be a bit of consolation for shell-shocked bullish traders. The big question becomes, “Is this the beginning of the breaking of the dam, or is it more of a one-off, an anomaly that will soon be righted?”. Knowing the answer to this in advance would be most profitable. The problem is we are not going to know until events unfold and we observe the results.

The reason that this is such a big deal in my view is because of the other negative factors we have been citing for gold over the intermediate and longer terms.

Most notable among these factors is the surge higher in the US Dollar. Simply put, the technical price charts for the Dollar are powerfully bullish.

Gold has been remarkably resilient in spite of the stronger Dollar which I believe is more a function of buying come out of Asia more than anything. That has served to stabilize the price. The problem however remains what it always is when it comes to gold and Asian buying. That buying is good for putting floors under the price of gold but what it is not good for is driving the price of the metal sharply higher. The latter requires strong, sustained and eager Western-based investment demand, the kind of demand that GLD gauges for us. That GLD has bled out so much gold this past week is not an encouraging sign because Asian buyers will not chase the price higher. They are extremely value-conscious; they are not momentum buyers like the Western hedge funds.

I am of the view that the reason the West may be having some second thoughts about gold is not only tied to the strength in the US Dollar, but also to the continued expectation of higher interest rates ahead.

Here again for your convenience is a comparison chart I have created of the gold price overlaid against the big Utilities ETF, namely “XLU”. The two are trading in near perfect lockstep at the moment.

Until the utilities sector gets a bid once more, gold has lost one of the bullish impetuses that were driving it.

Additionally, while the HUI finally showed some signs of stabilizing lately, especially after recovering and moving back above the 200-day moving average ( technically significant), it has thus far failed to garner anything that could remotely be called “bullish follow through enthusiasm”. On the contrary, it cannot even poke its head up into the downside Gap noted on the price chart.

One would have thought that as beaten up as the sector had become lately and as oversold it had been on the price charts, the corrective rally higher would have shown some legs. Instead, it is puking out with the bulls being unable to recruit enough believers to their cause. They are going to have to do better than they have been doing recently to persuade the skeptics, especially when those same skeptics can look over at the Currency boards and see the US Dollar leading practically everything.

The HUI to gold ratio has improved as it was able to climb back above that broken downside support level formed off the May low but it will need to turn higher immediately next week or it is in danger of collapsing back through that May low. That would be a negative development.

The Commitments of Traders report out today shows more long liquidation from hedge funds and other specs was the order of business over the past reporting period.

Total open interest continues to decline, something which bears close scrutiny for without an increase here, the path of least resistance for gold is going to be lower.

The weekly or intermediate term gold chart is currently in a negative posture and will remain that way until or if bulls can take the price back up through the bottom of the box (range trade) out of which it fell.

A handle change to “13” will first be necessary if that is to take place.

Downside chart support lies near $1250-$1245. Below that is $1230-$1228.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules