Gold Ends the Month With a Whimper
What a difference a day makes? One would think that after yesterday’s rally on weak GDP news — and rightly so considering the FOMC’s statement after that about the need for QE as far as the eye can see — a weak unemployment report would add fuel to the fire underneath Gold. But, no, that’s not the way things work in Bizzaro-land. It is important to remember that when there are important days of the trading week — in this case the expiration of January futures contracts on the COMEX — that markets will do whatever the master tells them to do. There was pain in yesterday’s rally that could be mitigated somewhat by taking the price down before the end of the month as the settlement period begins now.
While markets are not manipulable against their fundamental trends from a long-term perspective, they can be massaged based on the structure of the market on any given day or even series of days. With options on futures expiring last Friday and max pain being dealt around it was an imperative, despite everything else working in its favor, that the price of Gold be brought back nearer to its 200 DMA to inflict more pain on any longs considering standing for delivery starting tomorrow.
The gold market, all month, has kept coming back to his $1660 area, it’s like there is an invisible hand pushing down on it — sometimes very rudely I might add — to keep the bulls month to month just this side of drowning. If gold had followed through yesterday’s news with more bullish behavior I frankly would have been shocked. This is one of those outcomes that is almost predictable if you watch the tick on a day-to-day basis. This close will make for a neutral start to the February bar, depending on how things go in Asia tonight.