Gold ETF Sell Off Takes Slower Pace

The Market Gage - Dillon Gage's Precious Metals Newsletter

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.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.