Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Commitments of Traders Report - Speculators in a World of Hurt

Commodities / Gold and Silver Stocks 2015 Mar 09, 2015 - 12:34 PM GMT

By: Dan_Norcini

Commodities

Methinks the continued persistence of the entire speculative crowd (Hedge Funds, Large Reportables and the General Public) in remaining on the long side of the gold market must be due to excessive exposure to the plethora of gold perma-bull websites. There really is no way to explain this in my view as the charts are quite clear and have been for some time now.


Daily Gold Chart

Here is the Daily Chart: Three support levels have given way as if they did not even exist. Gold did bounce off of the support level shown near $1170-$1165 but the bounce looks feeble and more of a "let's book some profits before the weekend" kind of pop rather than any sign of strong, concerted buying.

Let me take a moment here to express my utter disdain at the charlatans in the gold cult who are once again out making more excuses for their pathetic predictions of soaring gold prices, etc., By now you know the usual drill - make fearless (and idiotic) predictions of "this is it"; "gold to soar"; "Chinese and Indian buying to take gold to new highs", blah, blah and more blah. When gold drops lower and their useless predictions are found to be vapid, they trot out the usual "this is official sector selling of the gold market to suppress the price", drivel.

Let's be honest here - these quacks no more know what gold is going to do next than my dog does. Yet for some bizarre reason, which I still am unable to comprehend, in spite of a treasure trove of failed predictions, the naïve gold cult devotees still put these people on some sort of pedestal and dote upon every phrase and sentence coming out of their mouths as if they are the modern version of the Oracle at Delphi.

Reader - if you are one of their victims, WAKE UP. The charts will tell you what you need to know and right now, the charts, as they have been doing for some time now, say, the price is headed lower.

10-Year Treasury Futures versus Gold Chart

I have noted the relationship that has developed between gold and the Ten Year Treasury futures contract since October of last year. Both markets are moving in sync. As the Ten Year futures moves lower, (interest rates rise), gold sinks. It is really that simple. No manipulation BS, no "official sector selling", No, "evil bullion banks slamming gold", No, "gold cartel takedown", ad nauseaum, ad infinitum.

Gold is simply another asset class that competes for precious investment capital allocation by investors. It pays no yield, throws off no dividend nor earns interest of any sort and therefore MUST HAVE FEAR, and lots of it, to produce any gains for its holder. With investor confidence growing in regards to the overall global economy, gold is seeing both liquidation from disaffected longs as well as short selling by those who believe it is going to lose even more fans throughout the remainder of the year. There is nothing the least bit sinister about this.

Daily Gold Chart 2

Back to the chart - the ADX line has resumed its higher move after a brief interruption occurred the last week of February. That indicates the downtrending move is back in force until proven otherwise. The -DMI is strongly above the +DMI, showing the bears in control of the market.

The next support zone lies down near the $1142-$1140 level. For the bulls to have any chance of turning this around technically, they would have to clear $1230.

In looking at this week's COT data and chart, one can see that the hedge funds still remain large net longs in this market. Even more interesting is that the category of speculators, "Other Large Reportables", actually had increased the size of their net long position over the past reporting period. OUCH!

Disaggregated COT - Futures and Options, Gold

The small speculators began bailing out of the long side and adding some new short positions but still remain net long. Remember, this is through Tuesday of this week. I am very sure that the number of their long positions was cut considerably after today!

Gold price versus Total Long Specs

One thing I am also noting is the price level at which the entire group of speculators began to rebuild their long positions in the gold market. Look at the above chart and note the green outlined ellipses.

During the month of November last year, specs began coming back into gold in decent size. They increased their long side exposure by the equivalent of nearly 107,000 futures and options positions at their peak exposure the last week of January this year. It was that buying which took the price to up near $1300.

That recent low point in their total long positions also happens to correspond to the $1167 level on the closing gold price chart. As of today's close, every single one of those new long positions that remain (38,000 or so), are underwater. Think about that! Now the question is, how much pain can those that remain handle? Again, some of that remaining 38,000 longs were obliterated today but I am sure a lot more still remain.

This is the reason why the support levels on the chart are now going to be very important. Below $1140, I do not see any support until the contract low near $1130. If the former level were to give way, the latter will certainly be tested. At that point, depending on the other external markets (interest rates, currencies and equities), gold may very well take out $1130. If it does, watch for a huge number of longs to throw in the towel which will provide some hefty selling pressure.

Time will tell...

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2015 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in