Gold Ends the Week off $25

By Tom Luongo in Gold and Oil News | October 12, 2012 22:19 |

A week of mild long liquidation took place in Gold this week as the markets were in risk-off mode for much of it.  After a $250 run up, sincere capping efforts on the part of the central banks and some rotation back into U.S. treasuries saw Gold finally put in what can be considered a bearish week for the first time in 2 months, closing at the lows for the week.

We are now looking at a 4 week consolidation between $1750 and $1800 per ounce.  Again, this Friday there were bulls attempting to push the price out of its intraday range only to be stuffed back into it and below by a wave of near unlimited selling pressure.  Volume for the week was light and the $1759.60 COMEX close is significant low enough to negate much chance of a monthly assault much past $1800 if the bulls recover sufficiently.  I would expect some more selling early next week unless there is particularly troubling headlines this weekend out 0f Europe, Syria or Iran.  The markets are being held in a very tight range pre-election.

With October options expiring next week this is an opportunity to punish longs who made a killing in September expecting to be able to double up on the long side after the QEIII announcement.  After all, the bullion banks will no go down without a dog fight .And since unlimited money printing means just that, unlimited, some of that money can be used to push markets where those printing the money want it to go.

Since Oil did not partake int the selling this week, bouncing around the $91/$114 level (WTI/Brent) for most of it, either we’ll see oil prices pushing higher or more liquidation in Gold as the Gold/Brent ratio is still 15.4, slightly above the long term average.



About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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