Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Opening
Gold Fights to Hold Uptrend
June 30, 2020 - (Gold Market Wire) - Gold's power uptrend is hanging in there, but the steepness of it is starting to be a challenge. Adding to the pressure is the Overhead Resistance which is closing in. Gold is reaching a time for action, and it either grabs the ring at $1781 and continues the power uptrend (PUT), or settles back into the channel.
If the latter pathway, (i.e. a settling down into the channel and surrender of the PUT), is chosen today, we must be on guard for a slow, perhaps protracted drift lower. To repeat yesterday's missive, today is a day of especial importance because it is the close of the month, quarter, and half-year. A sell off here will be a signal that a short-term top could be developing. Our concern is the ever worrying possibility of a "death by a thousand cuts" aka boiling frog syndrome, where small movements lower are ignored because of their gradualness. Then, within a few trading sessions we have a painful choice to cut or not. Right now, strategically, a decent rally towards the overhead resistance should be cause to remove some length. If the market settles into the channel, we will need to watch the lower trend line we pointed out last week. The chart paints the lower support line:
Markets are capricious animals, and none more so than gold. It is at times like this, when the market is strong that we need to stand back and get some perspective. We have no doubt that Gold is in the a major bull market, and investors should hold firm with strong hands. But traders have a different remit. Because they can use leverage, or take outsized positions, knowing when to lighten up is key. Aside from our regularly repeated warning that another stock market flushing could be in offing we would, in the interest of the aforementioned perspective like to to add the following simple fact. Since May 31, 2019 until today - i.e. a little over one year - Gold has appreciated nearly 40%. Also, professional trading managers like to tell their traders to cut the book down when quarters come to an end.
That is a truly significant move which cannot be dismissed, no matter how bullish one is. So, yes, Gold is insurance - and no, you don't trade insurance - but if you are trading Gold, think about the perspective of the past year - if you've been long throughout or through a big chunk of that time period. Taking profits is still part of trading, and the specter of all those Goldbugs that held on through 1980 and (some into 1981 and beyond) and failed to get out, should always be in the back of your mind - if, and only if, you are a trader. Remember - the entire world is as bullish as hell on Gold right now, and that should always cause us to reflect.
We have little doubt that Gold is going significantly higher over the next two to three years, but if you are trading Gold, you may find that sometime in the next six months a better entry point will present itself, and one should be keeping a mind for lightening up the trading book if the signals laid out here start to emerge.
Nothing goes up in a straight line. Not even Gold.