Tag Archives: Gold reversal

071414- Breakout Reversed!

Model Portfolio: Flatland (Neutral signal = 7/14)


Technical Read:  Spot gold prices staggered as overseas selling put the yellow metal on its heels from the start of trading. The selling was potent enough to reverse the recent uptrend. A breakout from a relatively flat trading range is a pretty good signal, making the reversal down back through the range potentially devastating. Spot gold closed down $32 hitting nearby stops short-term traders, including the Mummy website.  The trade is classified as loser as the long exit is lower than the entry. The good news is losses were substantially lessened (approximately 2 to 1) as we signaled a long trend near the bottom of the recent multi-week range. The position shift today to neutral puts us in a good position, more weakness and we are clear of it. It is unlikely there will be an immediate upside reversal. It is too early to consider shorting the market.

Ambiance Backdrop:

  • Not a lot has changed in the gold trading backdrop. Both the Dollar and longer-termed interest rates were well behaved.  Stocks climbed today but with the S&P 500 capping its gains a 10 points, it was not particularly eye opening.
  • The Israeli-Gaza air ware did not escalate into a full ground war. The aerial duel of airstrikes versus rockets is still on.
  • With a weekend ahead and limited fundamental news changes, it will be interesting to see if the bears can push gold down much lower.

GH Garrett – Veteran Commodity Watcher