The price of gold remains steady this morning even with a small gain in the dollar index. For the thirteenth straight day, we see the gold ETF sell off continue but at a slower pace. Possibly the massive redemption sell off is coming to an end. This is something the longs are looking for.
As I reported Monday, I believe the market took the ETF sell off and the open interest decline in the CME Gold futures of over 250,000 contracts from the highs earlier in the year, extremely well.
Today the CME FOMC market watch tool shows a 94 percent chance of a rate hike in December from a high of 98 percent yesterday.
The Oil market is up big this morning (over 5 percent) as OPEC said they are close to a deal on the first Oil supply cut in eight years. I believe the market has over reacted to the news. The Iranian Oil ministry said they will not cut, so a reduction in production is far from certain. The action in oil has been so intense this morning that it has attracted Wall Street Gold traders to leave the gold market for a short period as they see volatility in the Oil market at its best and love to get involved.
My technical friends still contend they will be right and I will be wrong as they indicate gold cannot sustain a rally as the charts indicate a sell bias is in the works. Just to add fuel to their case, they remind me that even though a rise in interest rates is not part of their charting calculation, it can only help their prediction. They remind me this morning that they are using February gold futures as their indication as December is not the active month any longer. They will now use a $1,190 resistance level in the February futures as their line indicator. At the time of this report, February is trading at $1,181, down $10.00 dollars on the day. Next level of support in the February futures is $1,172.
Please excuse me as I look on the internet for a fine steak house to treat my friends to, as my position gets weaker this morning. But I’m not conceding yet. I still believe the gold market has held up well (even with all the negative news surrounding it) and will surprise everyone.
Have a wonderful Wednesday.
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