Sharp Turn

November 14, 2014 - 5:34pm

 by Gary Wagner

An unusual day in gold trading, without argument.

Our favorite precious metal fell in morning's session, teasing some price-sensitive buyers into the market. Then the winds shifted and gold rose a bit. The light-feeling rebound quickly turned into a gale wind.

When prices crossed $1160 an ounce on the way up, bursts of high-volume trading indicated that stop-loss orders were triggered. These stop-loss orders have to do with a few factors.

It's Friday. The weekend is a 60-hour unknown sea to cross. Stop-losses may be ordered as gold begins to bounce, testing lows, testing highs but without much direction. Some analysts feel gold became undervalued and ordered that when it bounced up again, they should dump the short play and enter long.

Some have said the continued slide in bond prices is pushing investors to find havens other than the dollar. Certainly that's a tone setter. So was the U.S. dollar's small loss to a certain extent, although today may be just a pause in the greenback rally. (Good economic news from France and Germany helped the euro, by the way.)

WTI crude oil also influenced the precious metals today, popping back up 2.35%. Again stop-loss orders were instrumental. Oil has been dropping like a rock. Some feel too far, too fast.

"Gold has been moving lower for several weeks, and some investors are choosing to lock in gains on their bearish bets ahead of the weekend," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

We "Amen" that. As we said over the last few days, gold is in for some volatility. Why ruin a relaxing few days off?

EDITOR'S NOTE: Please be aware of this month's travel and holiday schedule, which will cover the period from today through the 30th. Thanksgiving falls within those days. Additionally, during that period, I will be in Indonesia, lecturing to key gold traders there. The time differential will make it necessary for me to send out the regular fundamentals (upper portion) of the newsletter at the usual time. The videos' timing may be different. You will receive special notification immediately following the release of a new video, which will appear on the website. Of course, trade alerts will not not change. I will monitor markets as usual and have all equipment necessary to produce videos. Thank you.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

Stop was hit on our short trade:

Short @ 1167.50

Stop was hit at 1174.90 for a loss of 7.40

Gold Market Forecast

What a day for gold.

According to Mining.com, after trading to an intraday low of 1146, "at 10 AM EST two massive trades of some 3.5m ounces were executed lighting a fire under the price and a climb to 1192 by lunchtime."

This takes gold's price now above former resistance of 1181. 1181 is now support and resistance is 1213. 

This is the type of scenario that traders look for to determine  if we are going to witness a key reversal or pivot point.

Obviously, we need to see if there is follow-through buying, once traders have taken the weekend to review the recent price action.