Gary Cohn Resigns; Did Gold Know It First?
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Gold spiked higher Tuesday, trying to break above the $1,342 resistance level, but it failed. Tuesday’s big rally came out of nowhere and could have been a simple short squeeze, or did the gold markets know something ahead of Gary Cohn’s resignation? Markets have a unique way of pricing in news before it happens, and that could have been the reason for the rally on Tuesday.
Markets hate uncertainty and the resignation changes some of the market dynamics. After spiking a little higher on the news last night, gold is now selling off a little and should resume the pattern it has been in since January -- consolidation working to the lower end.
Even with Tuesday’s strong rally, the failure to follow through today is a sign of weakness, indicating gold is facing headwinds and will probably test $1,300 if not lower. The action in gold is not one of strength but more of a short squeeze in a weak market. Until gold can take out $1,360, selling rallies is the correct strategy.
Keep those stops tight.