News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Opening

Gold Faces the 50-Day Moving Average

December 17, 2020 - (Gold Market Wire) - Roughly two weeks ago we identified the Gold resistance band between $1850 and $1865, and yesterday's action confirmed that, spending the entire session exactly within those parameters. Now we are starting to poke our head above the proverbial parapet, with a move the vaults the downtrend and prepares to face the 50-day Moving Average. The chart lays out the scenario.

the challenge defined...

The last time two times we crossed the 50-day with any conviction, the fools rushed in and were promptly smacked down. Colour us sceptical, but we aren't getting excited by this move. Yes, the move above the trend line is a positive, but it would be better on a weekly closing. The end of year and end of month numbers, along with a lot of low-volume action are going to unfold in the next fortnight, and we prefer the sidelines.

When we take into account the broader picture, Gold is still getting ready to put in a very solid year. We are 25% up from last years close and the Monthly horizontal is showing us where the 'bounce' came in - right on target.

monthly chart

So, the first half (well, seven months) of the year belonged to the traders, while the second half produced four down months in a row. We look ready to break that 'spell' this month, although it ain't over 'til its over.

Overall, we find it interesting that the book-squaring season is producing a rally for this month so far. That means shorts are covering, and also that buying interest is re-entering the market going into next year's continued US electoral maelstrom. The downtrend from August is still in motion, however, and caution is warranted. But the problems that beset the global monetary system, i.e. - money printing - are kept in check only by the complete down-throttling of the global economy, which is deflationary in extremis... and presents one of the most precarious imbalances a monetary system has ever seen.

Truly, a bad news week could see Gold move by hundreds of dollars one way or the other, and it is hard to see anything in the future but volatility of the most extreme type. Anybody who can get their hands on cheap, long-term option strangles, should probably consider it. We're unlikely to meander much longer. The next two years is going to present a vision of living hell in the markets, and that means whipsawing action and reversals that are going to be very hard to navigate. That makes cheap option wings the plat du jour.

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