With options expiry yesterday, gold moved erratically and fell as low as 1374. It then shot higher, touching 1402 and dropping back to end the COMEX session around 1380.
This meant that the 1400 calls, the 1375 puts and the 1350 puts all expired worthless, a job well done for the option writers.
Now that options expiry is out of the way, we should see the next trending move kick off - we consider a move to the downside to be the most likely scenario.
The rally since the 19 May low has been meandering, choppy and overlapping and is clearly a corrective wave. It becomes clear when comparing the price action to the impulsive thrust down from 1488 to 1338 the previous week.
ETF redemptions continue to pressure the price, with physical demand out of Asia countering this supply. However, it remains to be seen for how long this outflow from ETFs can continue without having a serious impact on the price of gold.
The dollar is back above 84 and attempting to hold this key level - a decisive break will see the dollar move much higher, with 88 the first target.
Oil continues to move lower in a volatile range, although yesterday surged higher, making a "lower high" at $96 on the daily chart.
We have been saying for many months that the next rally in gold will not start until equities correct meaningfully - the two "shooting star" candlesticks on the S&P daily chart need to be observed as they could be an early warning sign that a top is forming.
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Gold Market Update - 29th May
Published 05/29/2013, 04:56 AM
Updated 07/09/2023, 06:31 AM
Gold Market Update - 29th May
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