Net-bullish positions in gold rose for the second straight week, hitting the highest level in four weeks.
The non-commercial futures contracts of Comex gold futures gained 7,323 contracts over the week, totalling to a net position of 167,090 contracts in the data reported through May 30th.
Meanwhile, the commercial traders position totalled a net position of -183,219 contracts this week, registering a weekly decrease of -8,928 contracts from the total net of -174,291 contracts seen last.
Gold positions have risen by over +40,000 contracts in the last two weeks.
Gold prices were relatively overbought at the time, and with RSI on the hourly chart already having shown a case of divergence, traders would likely want to wait before pressing the bullish approach.
But the up-trend just kept moving until, eventually, price action encountered the prior April-high, at which point bears began to take over. This totals over $80 of gains for Gold prices from the ‘Comey low’, which printed just as news that former FBI Director James Comey was fired, around market close on May 9th. Perhaps more interesting than just the raw movement is the speed with which an aggressive down-trend turned into an aggressive up-trend with a minimum of congestion or gyration near the lows. This was a clean reversal, as if a light switch were flipped to turn the trend from bear to bull in the blink of an eye.
But as prices continued to run-higher yesterday, resistance began to show off of the April high around $1,295. Also in this area is a projected trend-line from the previous bullish move in mid-April; the projection of which runs into current resistance.
For anyone trying to understand gold trends and I mean macro trends you need to understand it's relationship with real (no nominal) interest rates. There's the answer to whether you should sell or buy and I do assume you mean trade gold. If you have bullion or coins don't ever sell them. One day you'll regret it greatly.
The gold chart, because of manipulation is a very technical chart and that means you can trade it as such and pay little attention to fundamentals or news or politics. Traders in the know trade the weekly trends which will give you both short and long profit as much as 30% a week.
Consider where real rates are to answer that question. If The Fed keeps raising rates and the economy slows they will be pressured to drop them. If inflation has risen also then the real rates are negative which pushes investors in gold as it is non inflationary. BUT there is enormous pressure from The Fed to suppress the price as we have just see at 1290. We are now in a selling trend as a result which could go down to 1190.
Bloomberg carries a piece on gold-price outlook in the coming months, noting that the outlook for the yellow metal remains divided, with the bear trend descending from record high in 2011 still intact, while higher highs, higher lows signal recent rally may have legs.
Key Points: Bearish factors: No incentive to hold the precious metal because equities are climbing to records Global economy is recovering Federal Reserve is so wary of tight labor markets that it has pledged to increase u.s. interest rates further this year
Bullish factors: Gold is an appealing hedge as long as Donald Trump's presidency remains mired in controversy and legislative gridlock And as terrorist attacks and geopolitical tensions heighten risks for other assets
The media will always speculate with a good case but as traders we know that the Fed continues to thwart the price at the channel line frustrating buyers and creating a ranging longterm pattern. IMHO we are grinding into a weekly roolover of the price on the ma13. Longer term the selling pressure will increase and take us down to 1200 again.
The massive spike down in the price we saw tonight proves that the Fed won't let it break the ber channel. Only a crash in the Dow or real negative interest rates will permit the price to break the line. I predict back to 1200 and maybe even below.
There is an inverse relationship between Sensex and gold prices. When investors detect a bullish trend in the stock market, they want to increase their stock investments in order to benefit from rising stock prices in the future. As a result of this shift in desire, gold demand falls, decreasing gold prices.
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