Morning Gold Fix: June 22, 2010
Commentary courtesy of www.fmxconnect.com
Gold washed out after a promising start on Monday, with the August future reaching an all-time high of $1266.5 per 100 troy ounces before an epic collapse. Gold fell about $35 to a low of $1231.6 before recovering slightly and closing at $1240.7, almost a 2 percent loss for the day. The selling has resumed in early morning and overnight trading as anxious investors take profits and question whether gold is overbought.
Buy the Rumor, Sell the News?
With all the news, rumors and factors that came out on the bullish side yesterday and last weekend it should be obvious to everyone why the market was lower; The Chinese have a time machine and knew what they were going to say before they did it. Then having positioned themselves before the event, they sold into the rally.
Fact is, despite China’s decoupling statement they elected to leave the USDCNY unchanged for the moment. The real culprit behind yesterday’s selloff is the poverty mentality of Gold longs. Gold bulls suffered through slow climbs backed with calamitous selloffs for years. The 13 year bear market in gold has scarred many people into thinking that the yellow metal cannot hold onto its rallies. Comex open interest hit all time highs yesterday, that must be bearish! Thus, the prophecy fulfills itself. “Gold is up how much? Better take our profits, we got lucky” is what hedge fund managers say whenever gold makes them any money whatsoever. This is where the expression A Bull market climbs a wall of worry comes from. So puke all you want ye of little faith, we’ll be there buying all the way down to zero!!
Contango watch: Gold’s contango has decreased each of the last 3 days despite net weaker bonds and a net lower market.
August gold was down 5 to $1235.7 per 100 troy ounces as of 8:10 AM EDT, this morning. The September U.S. dollar index was up .231 to 86.21. July platinum was down 9.8 to $1580.5 per 50 troy ounces. Silver was down 8.8 cents to 18.72.