The yellow metal had began its two-day rally by finding bidders on the weekly of $1,046. Even though gold has seen nice gains following the FOMC, the paradigm has been to sell rallies despite whether or not it fundamentally makes sense. According to the Commitment of Traders data, large speculators are the most short gold ever.
This could cause for a disastrous 2016 for hedge funds if fundamentals for owning gold improve, as we have already seen what happen when crowded trades unravel in the euro .
On the four-hour chart, gold is hovering just under $1,080 and the 200-4H , which will act as dynamic resistance until a confirmed breakout occurs. Price action is trading at the upper-end of a symmetrical triangle, while a minor descending support within the pattern is found (dotted line). Within the pattern, support is found at $1,074 and $1,066, while a confirmed breakout could signal a move higher to $1,088 and $1,095, potentially $1,111, per ounce.
If gold prices do see selling pressure and close beneath trend support, weekly support levels will remain key. $1,000 and $955 are technical targets.
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With the Fed behind the curve, an analogous herd mentality (including those who see gold as a useless anachronism to be sold for some of the US$4.8 trillion of Fed Bal sheet funds that are sloshing around.... before the liquid lot face an unprecedented herding themselves within the foreseeable future) appears to be fermenting as many jump aboard the short-gold bus that may prove to be an expensive trip to nowhere
One of the best ways to hedge central banks IMO. Funny thing was that hedge funds, who are shorting hand over fist, were the most net long in 2011 when gold topped.