Markets were under renewed pressure overnight as a stronger dollar, worries over a liquidity crunch in China and expectations that the Fed could begin tapering its quantitative easing measures this year all weighed on the market.
Prices were sluggish in India overnight, as demand there has gone into a seasonally quiet period not just for India, but the metals in general usually get quiet near this timeframe. Of more importance is the seasonal low points of the year are MOST OFTEN established in the next 30 days. This of course is just an average and in weak years it can be as late as Mid-August or strong years as early as May. Either way, there is usually a price BOUNCE ATTEMPT that takes place. Last year’s most important price lows were established during this particular week of the season (June 21st-June 29th) and a 250 dollar move up into October took place.
The problem at the moment is that the major global markets are in a liquidity squeeze, and that is something we’ve discussed at the website over and over again thru the years that it is the one thing that can bring gold down (in our opinion). While the liquidity problem is the main headline news, subscribers at GoldTrends are aware that we began discussing this possibility as early as February at which time and all of our trend indicators have remained in bearish mode for quite a while in the metals, confirming this potential that has now become reality.
The major development has been China’s banking sector as overnight interest rates last week actually shot to 25% as a liquidity squeeze is in full force. Stocks were down a whopping 5% on Monday’s trade in Shanghai.
After last week's sell-off to their lowest levels since September 2010, it is possible that the gold prices have gotten cheap enough to attract some bargain-hunting, particularly after the modest bounce on Friday. Still, ETF holdings continue to fall, which means that long-term investment type trade is still liquidating.
Gold Chart
We’ve had such a move in metals that we’re going to need to see a bit more action before we can see if we’ve put in a bottom. The short term charts show support at 1220-1230 in gold and resistance at 1325-1337. This 1280-1285 area is sort of a pivot and if there’s any good news, this area (1250-1280) is an important long term price area. The problem right now is this global liquidity squeeze that has all markets in a major selloff and thus the danger of lower prices and panic is evident in all markets.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
