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Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Opening
Gold Support Gives Way
May 1, 2020 - (Gold Market Wire) - Gold has broken out of our box between $1680-$1740 and is heading lower this European a.m.
On Wednesday we pointed out, "Momentum is flagging. There is a slight downward tendency and we get the impression that this is a market that would like to search for a bottom and make another attack higher. The question is whether that bottom will be "inside the box", or at a lower point." We now know that it will most likely be outside the box unless $1680 is very quickly reclaimed. The "falling flag" formation was our tip that momentum was running out of steam.
Which indicated today's move...
Gold showed its hand near the end of the trading day yesterday, as market makers rushed to get out of length. The failure to clear $1748 on the last trip up set off the warning bells, and without that prize in the bag, at end of month, it was time to abandon ship. Today's falling stock markets have given some energy, no doubt, to the downside as well.
But, perhaps the simple truth, is that after loading up on ETFs, which reached record levels on record inflows, the investment community had simply run out of buyers. It's always worth remembering that the investment community has a horrible track record in picking entry points into the Gold market. They have done so once again.
Although the simplest of indicators, once again volume tells the story, although it usually passes people by. From April 14 to 24 COMEX Gold Volume was over 200k lots every single trading session, with several prints at the 260k+ per day level. From April 24 to 29 it was under the 200k level, every single trading session, and twice traded down to 160k lots per day. (Of course there was a final pop in volume yesterday, when everyone started to bail-out.)That kind of swing in volume - registering, at times, 40% lower than the week before - should set off alarms in any bull. Gold loves to rise on volume. That is its retail nature. But when those buyers run out... its time to tread carefully.
This past month was no different.