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The Anomaly Of Gold

Published 02/28/2020, 03:11 PM
Daily Gold

With markets plunging with ever-increasing momentum one would expect to see gold rising strongly on safe-haven flows. And perhaps none more so than yesterday with the YM Emini closing 1268 point lower on the day on rising volume and widening spreads. For gold, this should have been a positive one, yet the price action for the precious metal was relatively muted, rising then falling and closing with a deep wick to the upper body and a shooting star candle on high volume. Equally puzzling is the weakness in the U.S. dollar, not least as a second safe haven, but in addition a direction which would normally be positive for commodities. So what are we to make of the last few days, and more importantly the outlook for next week?

The initial weakness first appeared on Monday on high volume with a wick to the upper body, signaling selling and no doubt some profit-taking. Tuesday’s price action then triggered the volatility indicator and within which we continue to trade at the time of writing. Yesterday’s price action signaled weakness which has been the case in the early trading session today with gold moving lower, but still within the spread of Tuesday’s candle.

Much will now depend on how today’s price action closes. If the selling continues and moves below the $1627 per ounce level and the low of Tuesday, gold the metal is likely to continue lower, given the low volume region now below on the volume point of control histogram, with a possible return to the $1600 per ounce area. As we can see, even at this early stage in the trading session, the volume is building strongly and suggesting further selling to come.

Latest comments

Look at silver and golds charts from last week. They go down together on the excact same moment. It's clearly the big investment banks and funds on Wall Street working together with their robots, to manipulate the precious metals market, trying to make the dying petro dollar look good. We're not all ignorants.
It was ALL precious metals going down at the same time. Got zero to do with margins calls. Where do you get this information? JP Morgan or what?
The price hit DEMA 200 on daily chart. Most probably investors sold gold contracts to compensate for the margin call for stock long positions. The close price is where the last rally started 1585 USD. Given the fact that FED rate cuts are likely (which would support gold demand) and DEMA 50 direction is still up, I expect gold to target DEMA50  (around 1620 USD) next week.
Thanks Anna C.
Thank you Anna C. totally agree with you... by the way... your books VPA, are the best... Thank you again!
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