Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Banking Woes Cause Gold Spike
April 5, 2023 - (Gold Market Wire) - In case you haven't got the message yet, 'Gold Reacts to Banking Crises'. Every time a bank gets taken over in a shotgun marriage, Gold jumps in response. This is simply foreshadowing, the rapidly approaching hour when multiple banks fail, and Gold resets at a much higher price - and then, doesn't retrace. The new price will become a floor - much like $1,000 per ounce (o.k. - yes, $1048, to be precise) was a few years ago.
So, we cleared $2050, but we didn't hold. In our book that's even better. A nice big jump, and a 50% retracement on a closing basis, which is what we got. That is much more sustainable than a mere spike. But this should not negate our 'reset' thesis. These are all different animals. A reset won't have a spike run-up and tail off, it means we will simply wake up one morning with Gold trading at $3,000+, on more or less zero volume.
Trading this is going to be a problem, and one of the ways to circumvent that is to remember to buy pullbacks. We expected a much bigger and longer pullback in Gold, but we are honestly now wondering if we are going to get it. Another slew of banking news, and the "pullback scenario" will be in the dustbin.
So, much like one must do in the trading arena, we have to re-think everything. Right now, we'll be eyeing up call spreads. We'll be looking for $2,050+ close on a weekly basis to indicate some legs to the recent move higher. And that core we shedded last week is going to be have to be re-imposed. When (because it doesn't look like there's much shot at an 'if) we start trading over $2050 on a regular basis, the core will have to be increased significantly.
We're glued to our channel. We should be selling off, and we are glad we didn't get our short position away and take a moment to remind ourselves of the value of stops. The Gold market is getting ready to rip - but the preamble to that might just be a serious down move first. We don't want to anticipate the market, and have to be comforted with our core position, should everything run away to the upside. If we get over $2050 on a weekly close, we will establish small length for the trading position, while increasing the core. Presently, we must gather patience. It is usually at these stages that amateurs do crazy things that cost a lot of money.
Remember Our Motto: "Stop Trying to Hit Homeruns!"