It has been a long week with some sharp moves followed by sideways trade action. There has been little in the way of fundamental developments as the markets seems to be trading more on technical levels with just a smattering of data and news to either continue momentum or slow it considerably.
By far the biggest storyline in the markets this week has been the precipitous fall in the price of gold. After closing just below key support at the 1140 level last week, bullish traders panicked this week, driving the yellow metal down by a whopping 5% from last Friday’s close as of writing.
While many have been waiting years for the China bubble to burst it seems that maybe that time is here, or at least that is what the commodity markets are telling us. Just when it seemed that commodities were ready to rebound we saw one of the world's biggest hedge funds, and outspoken China bull change, its tune.
After gold's midnight massacre it seems that the selloff is acting like a cancer across the commodity complex. The market is fearing that the person or government that sold massive quantities of gold in the middle of the night may know something the rest of us does not.
Risk is still extremely high and I still believe there could be an event before the end of the year that torpedoes the market. For right now we are due to back and fill. Like March 2011, a decent move commenced but it lasted about 6 weeks. We are coming to the second half of July, its vacation time for the markets. Nothing too drastic should happen here as August is just about the slowest month of the year. But once September gets here my antenna will be out.