Last week June Gold opened at $1,580.80 and by Thursday closed down $15.90 to $1,564.90. Bears since then took the wheel and drove gold price of a cliff. Friday we saw gold drop $63.50 and today, Monday, April 15 gold as of 11:00AM CT has dropped $120.60 hitting a low so far today at $1,355.30, like I said driving gold off a cliff. Goldman Sachs came out dropping their forecast for gold prices and pushing their message to sell. We have not seen gold prices where they are today since March-April 2011.
As far as where price will settle down, that may be at $1,300. If we see price action below $1,300, that would put $1,200 in play. For commodities this week looks to be starting out as a cleansing week for bulls. Any bets out there as to when gold hits $2,000 an ounce? And just how much gold does Cyprus want to dump?
Proceed to Page 2 for the latest COT Data...
So what have we seen with big money like Goldman Sachs? A look at the COT Disaggregated report will shed some light. Looking back in the first week of October 2012 we see Producers net short -216,654 contracts and by the first week of January 2013 Producers were net short -135,518. As of last week Producers were net short -76,562. Swap Dealers back in the first week of January were net short -42,954 contracts and as of last week were net short -67,240 contracts.
Look back to the summer of 2008 and you will see the last time these two groups got so close. As a matter of fact for a bit Swap Dealers crossed below Producers carrying a larger net short position than Producers. See where the price of gold went? $700. I highlighted the bearish posture big money starting taking way back in October. Funny how now Goldman Sachs is issuing a sell in gold? You want to know when the drop will stop watch big money.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
On the daily chart below you can see that there was a technical trade set-up reflected in the TS Analyzer at Trends in Futures the last week of March as the market dropped below $1,600. Currently gold is in a strong trend with ADX at 35 and DI Diff. at 28.73. With these moves you might expect a higher ADX number but this drop so far has only lasted two days. Also you can see that the market has entered oversold territory. How far will gold drop and how much longer will this continue? We need to look at a weekly chart for that answer.
Click to enlarge.
On the weekly chart you can see this drop started in early October 2012 as gold prices tested $1,800 with gold hitting a high of $1,794.80. Numerous times through this drop gold saw a strong weekly trend develop with ADX numbers over 40.
Have a prosperous trading week.
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