TradingwDavid
Short

Gold analysis and some considerations

COMEX:GC1!   Gold Futures
We are experiencing a period in which, making analyses is not easy given that in the next months, episodes and waves of sentiment will dominate the markets.

However, yesterday giving an eye to the COT report, I just could not restrain myself from making some considerations, in particular on one of the most traded commodities , the gold .

From August until the end of 2019, gold moved within a range with support at $ 1,462 and resistance at $ 1,553. Whenever the price broke one of these two levels, the movement turned out to be a false breakout.

With the new year, following the killing of Iranian General Soleimani in Baghdad by means of a US drone, and the consequent Iranian missile reprisal against US bases, we have seen a rise in the price of gold . That is common when there are winds of war.

Once the danger of a USA-Iran war has returned, at least for the moment, the price of gold , in turn, has returned to the previous range. That was until Friday when it closed just above resistance.

However, as mentioned, in the short-term the markets are driven by news, twits, sentiment, and other similar amenities. So I do not rule out that in the next few days, the price of gold may rise, but I remain convinced that it will return to test at least the $ 1,550 area.

This is because, apart from a war, I see no reason for a further rise in the price of gold . Certainly not as a safe-haven asset, as the US stock market will continue to rise, unless there is news particularly bad, for several months to come. And it could not be otherwise.

Do you know why the S&P500 has been going up steadily since August if not for a couple of sessions of profit-taking? For strong growth in companies profits? Lol, of course not.

The fact is that the American stock market is increasingly doped, manipulated. Who among you knows about the Government Pension Investment Fund?

It is the largest pension fund in the world with nearly 1,500 billion dollars managed. Last October Hiromichi Mizuno, the CIO (Chief Investment Officer) of the fund made a decision summarised in the title of a Financial Times article on December 3: "World's biggest pension fund strikes blow against short-sellers - Japanese giant GPIF halts stock lending from its equity portfolio." In practice, what does it mean?

For 4-5 months, Wall Street has only risen because the bearish counterpart was missing. And this will continue in the next months, unbalancing the markets more and more. To give you an idea, go look at the Tesla chart, by far the best selling short stock on Wall Street.

Going back to gold , let's see, how mentioned at the beginning of the analysis, the COT .

In the last COT report released on Friday 17, the contracts (of 100 troy ounces) of the Non-Commercial (that is, Large Traders) are 376,809 (LONG) and 57,574 (SHORT), for a Net Position of 319,235 (about 3,000 contracts less than the previous week).

In the last six years, only in 2016, the Net Position has reached a similar level. And without good reason, how many Large Traders will still buy gold?

Comments

Excellent discussion, great insight. Thank you for your generous sharing of personal wisdom~!~
Reply
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