Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Gold Shreds - but The Box Holds
December 15, 2021 - (Gold Market Wire) - Well, we finally got some movement in Gold, but in reality it wasn't any type of break-out. The Box we pointed out is still hemming us in, but giving some chance for scalpers to eek out a living.
The 100-day moving average is almost parallel to top of the Box, and as we noted, taking it out would be a first order of business for the Bulls. So far it hasn't happened.
If we look at our channel, we also note that we are in a slow established downtrend - which is not going to help the bullish case.
In retrospect, the name of the game has been to sell rallies, and with the channel holding, there doesn't seem to be any other viable strategy. Those who sold the top area of the Box at the 100-day moving average yesterday nailed it. Discipline works.
On to Crude Oil.
The trend line which was our lower marker got shattered yesterday after an IEA report that the market was turning in towards surplus. The front to back futures spread contracted like a black hole, from over a dollar of backwardation to an intra-day negative. Those who bought the trend line found the value of stops, and got taken out before the full carnage set it.
The talk of a suddenly well-supplied market is something we treat with skepticism when we consider price action. One thing is for sure, now - there will be no OPEC or OPEC+Russia expansion of production at the next meeting. We may well revisit the lows drawn by our channel, especially as the market gets thin, and we can probably envision some kind of SPR draw-down that isn't announced, as the Biden administrations is fully aware that Gasoline prices will be the final nail in the coffin for re-election of the Democrats in House in 2022.
Now we can see the late-Nov/Dec. 13 range that is going to be our focus. Right now we are mid-stream and need patience. We remain bullish. Crude is entering a long term bull market. The long-expected Russian invasion of Ukraine's eastern Donbass region, if it does happen, will set the market much higher as tensions flare up. That could also cause an explosion in gasoline prices, to the dismay of the Democrats. It would certainly be an encouraging factor for Moscow. Military flare-up=high US Gasoline prices=Demcratic loss of Congress. Surely Moscow would like to see the back of the Dems.
The strategy in crude oil is now to find a place to buy. The idea of being out of the market holds no appeal. Military action could occur anytime in early 2022, so length is the place.