Key Reversal In Gold; What's next
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
A funny thing happened on the way to new highs. On Thursday, gold looked like it was going to break out the upside and take out the highs on its way to $1,400. Suddenly without warning, the markets reversed and went from up $8 to down $14. This is known as a key reversal, which is an indication that the top of this move is in.
With the dollar crashing, equities going parabolic for some reason at 1:16 p.m. EST on Thursday, gold decided that the move was over. The move lasted just over an hour, taking the metal from highs to lows. Although gold is showing lower on the board, itâ€™s rallying this morning; $1,360 is the level to watch.
Once again, the near-term top appears to be in, the dollar looks like it bottomed and the commercials are holding a record short position. Markets never announce themselves, but they do send messages, and the message here is a pullback has a higher probability than a continuation of the rally.