Gold This Morning: Have you heard about the Bernanke put? –Jon
Modest overnight volume by recent norms with a trading range of $6 with seemingly no concerted buying or selling probes unlike yesterday morning’s bungee jump bear trap. Open interest after Friday’s extraordinary volume actually contracted by ~2,000 contracts and patently confirms that shorts continue to cover and that new money is not in the room right now. GSR is ~56.50 and we interrupt this program…since according to my Bloomberg China has raised rates on one-year lending and depos by 25 BP with the knee jerk reaction being an instant ~$8 drop in gold… and since I had already titled this morning’s piece with an uncharacteristically veiled suggestion that there just might be a herd (as in ‘moo’) mentality out there, we now have a real-time moment to observe how the beat goes on. Today: The gold facts remain intact so let’s steel ourselves for a contrarian play and see if we can replay yesterday’s bounce from around $1352. Use a tight stop.
Edit (8:40) Adding a picture to Jon’s words. There’s the support cluster at 1350, but every so often it is healthy to drop down and test the EMA 20 (this leg has been supported by the extremely momentum driven EMA 10 with occasional plunks of the 20). Just remember that news does not manufacture important tops. That said, if gold fails the EMA 10 (currently 1332), the possibility of a decline to major support in the 1260’s opens up. I do not expect this to happen – yet – but these are one patron’s interpretation of the technicals.
Interestingly, on a GLD chart what do we find? A couple gaps that it would be handy to have filled…