Commodity Bears Celebrating ?Golden Week?
Today’s Spotlight Market
Speculators both large and small appear to be in the process of long liquidation selling of Gold futures following the market?s poor performance of late. The most recent Commitment of Traders report shows non-commercial traders (normally, large speculators and funds) shed over 30,000 net-long positions during the reporting period ending on February 10th. Non-reportable traders (small speculators) shed just over 2,000 net-long positions during the same reporting period. Despite the large number of contracts that were liquidated, the overall speculative long position remains rather large at nearly 190,000 contracts. ?
Fundamentals
Now that the Chinese New Year?s celebrations have begun, precious metals traders should anticipate increased market volatility and thin trading conditions for the next several sessions while many Asian trading desks are on holiday. Gold, in particular, could see some continued price weakness, as uncertainty regarding a continuation of a financial bail-out for Greece and a rather ?dovish? take on the FOMC meeting minutes released on Wednesday have, so far, failed to generate much bullish enthusiasm for the ?yellow metal?. While last week?s sell-off in Gold prices may have been tied to market participants squaring positions ahead of the Chinese New Year?s holiday, this week?s rather poor performance for Gold prices could be tied to a lack of physical Gold buying out of Asia. China trails only India in annual physical Gold consumption, so the lack of a major global Gold buyer in the market this week appears to be weighing rather heavily on cash market activity.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for April Gold, we notice the recent price sell-off began to accelerate once prices fell below the 200-day moving average (MA) on February 6th. In addition, the 20-day MA is in the process of crossing below the 200-day MA, which is viewed as a bearish signal by many technical traders. Since that time, we have seen the market fall by nearly $50 per ounce, with the market preparing to test support at 1200.00 per ounce. The 14-day RSI has turned weak, but has yet to move to oversold levels, with a current reading of 40.00.? The recent low of 1197.20 is now seen as near-tem support for the April futures, with resistance found at the 200-day MA, currently near the 1252.00 price area.
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