I felt compelled to write some comments this morning after traveling to New York City yesterday for some meetings, while watching the gold market momentum change direction.
Yesterday we could not hold the $1,246 level of support, a level which everyone with a long position was hoping to hold. As soon as we broke thru the $1,250 area selling pressure accelerated, triggering stop loss orders along the way, (everywhere it seemed), between $1,246 and the $1,237 area.
Some of the Wall Street spec traders have now reversed their long positions, previously purchased days before around the $1,240 area, and are now sitting with small short positions looking for the Fed to indicate rate hikes are in the cards.
Overnight, selling out of the Middle East put more pressure on the yellow metal.
For the first time this year we’ve seen outflows in the gold ETFs. With the strong sell off in the price of gold yesterday, some short term investors decided to take some profits off the table and are waiting for lower levels to get back in.
Now all eyes are on tomorrow’s FED decision on rate hikes. The consensus is, a rate hike will not happen before the June Fed meeting. Nonetheless, in an absence of any rate hike tomorrow, we look for the language published after the meeting for an indication going forward to what the Fed policies will be.
Have a wonderful Tuesday.
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