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Gold: Volatility Reigns Supreme



  • Gold is now an economic indicator and it has become a currency that governments, individuals and institutions can use as a tier one asset collateral.
  • Even though we have been in a consolidation pattern since then, testing the $1681 level about four times since April, it is basically a consolidation stage.
  • We are entering a very interesting period when the physical market in gold has regained leadership, at least in terms of directing the price for the time being.
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Gold Fundamentals

As we look at the spot price of gold at $1699.90 ask and the futures price in the futures market at $1703.2 bid based on the August delivery. If we go back a couple of months, this spread was as wide as $80, which meant that people who wanted to take physical delivery in the spot market had to pay up to an $80 premium. The arbitrage between the futures contract in the past allowed central banks to use this contract to narrow the spread by selling in the futures paper market record numbers of supply contracts that did not exist in the physical market, but which manipulated the price to come down to narrow that gap and bring the price of the futures contract down to as close to zero as possible. Part of the problem that these short-selling predators in the gold market ran into was when there was no physical gold to cover their short positions. Therefore, we have seen a rally in the price of gold to a high of $1788.80 on April 14.

Before that rally, we experienced the coronavirus liquidation in early March, which brought the market down from a high of $1704 to a low of on March 16 of $1450. In seven days, the market collapsed more than $300. There was massive selling pushing the market to these levels. Coming down to this level identified by the Variable Changing Price Momentum Indicator (VC PMI) annual report published in September 2019, with the moving average at $1454. BY the market coming down to making a low of $1450.90, it activated the trend momentum. When the price closed above that trend momentum, it activated a bullish yearly signal from the 9-month trend momentum, which reactivated once again the upper levels of the Sell 1 target of $1655 to $1800, which we published. The

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This article was written by

Weekly AI gold, silver and E-Mini S&P reports with 90%-95% probabilities.

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Analyst’s Disclosure: I am/we are long GDX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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