Where did everyone go?
I find it very interesting that the gold market has hung on even with strong with the significant Gold ETF redemptions over the last 12 business days and most important, even given the dramatic decline in the Gold futures open interest.
The CME Futures Gold open interest is down 200,000 contracts from the highs at approximately 421,000 contracts. I don’t remember seeing the open interest this low for quite some time.
So after speaking with my technical gurus, I have taken the other side of their trade. Last week I had reported that my tech friends indicated that the level the market had to hold was $1,191 in the December contract or we would see further declines.
At the time of this report we view the December gold price up $9.00 on the day at $1,187.50.
I think the technical boys have it all wrong. The selling pressure is totally out of gas. I believe the interest rate increases are already factored into the market and unless the FED surprises everyone and raises the FED rate 50 basis points in December, the selling pressure is totally extinguished.
So having the nerve to disagree with the tech guys, I’m doubling down on all the dinners I owe them for being right all year and predicting a gold rally is in the works.
Maybe the Trump rally in the equity market is out of gas also.
To summarize why I’m taking this stand:
- CME Gold open interest has been declining and the market seems to be taking it well.
- Financial advisors I spoke with report many, many folks have left the Precious Metal ETF market for the equity craze, as seen by the amount of Gold redemptions taking place.
- The dollar rally has also run out of gas trading at 101.50 after reaching a year high of 102.05.
- The market has already accepted a 25 basis rate hike in December.
This time of year you always hear equity traders on business news channels calling for a Christmas stock market rally. This year I’m asking Santa for a Christmas rally in precious metals. Otherwise, Santa will have to help me pay for the expensive dinner I’ll have to buy my technical buddies.
Have a wonderful Monday.
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