From their recent respective peaks back in April, the yuan is down by 8% while gold has lost 9.3%. Most of the relatively worse performance seen in gold has occurred during the past week as the market prepares for what is expected to be a very strong US Q2 growth number on Friday.
Gold has once again managed to find support ahead of $1,200/oz, an area which has provided support in the past and which represents a of the $329/oz rally seen between December 2015 and July 2016. For this level to hold, however, it is clear that the dollar appreciation needs to pause or reverse, especially against the yuan as highlighted above.
In the week to July 17, gold’s continued slump to a one-year low helped trigger another spate of heavy short-selling by funds. The net-short reached 22,000 lots, just shy of the 24,000 lots record seen in December 2015. Back then this view was reached just before the first US rate hike signalled a low point from where gold rallied strongly. The current gross-short of 132,000 lots has never been seen bigger and it has left gold in a much better position to react to price-friendly news.
Norm Winski, publisher/editor of Astro-Trend is a former Chicago floor trader with over 40 years of market experience. The Astro-Trend letter utilizes advanced technical and cyclical analysis to forecast about 30 futures related markets. In 1991, Technical Analysis of Stocks & Commodites Magazine awarded Norm Winski the title of “Certified Technical Genius”.
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