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Gold Shorts Getting Squeezed

Commentaries & Views

Yesterday’s close: Settled at 1224.6, down 4.1

Fundamentals: Gold is alive and well as a safe haven, gaining nearly 1.5% this morning. Overnight, equity markets got hammered and the Dollar and Treasury yields grinded lower; a perfect storm for Gold to respond and it has. Shorts are certainly getting squeezed and though the record Managed Money net-short position was cut in half since October 9th, it still sat at a ratio of 1.5:1. Look for the shorts to defend the psychological $1250 area and this should bring a near-term ceiling if the Dollar remains stable. The economic calendar is light but Minneapolis Fed President Kashkari speaks at 8:30 am CT. Though he is still considered more dovish than his colleagues, Kashkari tended to support rate hikes. His comments today amidst heightened volatility will be interesting. Richmond Manufacturing data is due at 9:00 am CT and December Fed voter, Atlanta Fed President Bostic, speaks at 13:30 pm CT. Dallas Fed President Kaplan and Kansas City Fed President George are also on the docket.

Technicals: Traders must understand that we have major three-star resistance at 1244-1250. Gold has not close above the 100-day moving average since April and today it comes in at 1233.8. This aligns with 1235.3 to create a crucial support level; a close below here will signal a near term failure and encourage repositioning from the bears. We remain long-term Bullish in Bias, but traders want to lock in gains at this level, call our trade desk at 312-278-0500 to discuss strategy.

Bias: Bullish/Neutral

Resistance: 1235.5**, 1240.5*, 1244-1250***

Pivot: 1230

Support: 1219.6-1220.7***, 1213.2**, 1204.3-1205.9***

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