Is gold’s dip a correction or trend change?

Market Pulse: Sept 26, 2011

Last week gold dropped like a NASA satellite falling from space. What was the driving force of this drop?

Last week December gold opened the week at $1,820 and closed the week at $1,639.80. The weakness in the market was very clear if you were watching the COT report week to week. Before I cover the COT, look at the daily chart below to see the technicals. We see ADX now at 33 reflecting a strengthening downtrend. You can see how the very strong uptrend that started back in early July started weakening mid-August after gold touched $1,900 for the first time. MACD is showing momentum building in the move down with increasing divergence and Stochastics are deeply oversold. Not concerned about this as ADX is at 33 and rising. You also can see the large drop in Open Interest. So who is responsible for this large drop? Let’s have a look.

Proceed to Page 2 for the latest COT Data...

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