Bullion Banks Target the 200-Day Moving Average in Gold

Bullion Banks Target the 200-Day Moving Average in Gold a Third Time this Year

In the hope of ennobling Comex speculator liquidation, The Banks are yet again targeting gold’s 200-day moving average.

Twice antecedently this year, The Banks have managed to maneuver the gold value down and thru the 200-day moving average. 

On these previous occasions, the speculator merchandising that followed allowed The Banks to shop for back and canopy massive amounts of their perennial short contracts.

On Friday, Gregorian calendar month 28 of this year, total Comex gold open interest was at 470,787 contracts and value was clinging to support at the 200-day. future day of Monday, May Day saw Comex gold smashed for $15. 

By the time the merchandising subsided on Tues, May 9, value had fallen nearly $60 and total Comex gold open interest had contractile by over 37,000 contracts.

What had occurred? once value fell and closed below the 200-day on May Day, tremendous amounts of speculator long liquidation ensued. it absolutely was this merchandising that drove value down.

Taking the opposite facet of those trades were The Banks, that used the specification merchandising to shop for back and canopy existing short positions.

Evidence of this is often seen within the Commitment of Traders report from the survey week that concluded on Tues, May 9. That report saw the big Specs in gold decrease their internet long position by 40,200 contracts whereas the Commercials (Banks) attenuate their internet short position by 39,500 contracts.

Price then rallied from $1225 on could 9 to $1305 on Gregorian calendar month half dozen before starting another pullback.

On Friday, June 23, total Comex gold open interest was at 449,164 contracts and value was yet again clinging to support at the 200-day. future day of Gregorian calendar month 26 saw another one amongst those disreputable “flash crashes” that diode to a brief breach of the 200-day however this line wasn’t utterly broken on a closing basis till Friday, June 30. 

Gold value then fell nearly $40 in 5 days before bottoming at $1215 on Monday, July 10.

From day through Gregorian calendar month 10, value fell over $50 and therefore the 200-day moving average nonetheless, this time, total interest truly rose by over 30,000 contracts. Again, what had occurred?

This sale not solely saw specification long liquidation, it additionally saw a big quantity of latest specification shorting! proof of this is often once more found within the CoT reports of the combined fortnight of Gregorian calendar month twenty eight through Gregorian calendar month 11. 

Those reports showed the big Specs in gold decrease their internet long position by 71,000 contracts whereas the Commercials attenuate their internet short position by 76,000 contracts.

So currently here we tend to are once more. even as in Gregorian calendar month and Gregorian calendar month, value has fallen back and is finding support on top of the 200-day. additionally even as in Gregorian calendar month and Gregorian calendar month, the big Speculators have to date remained steadfast with their internet position largely unchanged over the last four CoT reports. 

With history as your guide, what level does one assume The Banks can target next?

Of course it’s the 200-day moving average, presently found close to $1266! There will be very little doubt that The Banks hope to presently break this level once more. 

In doing thus, they hope to inspire enough specification liquidation that open interest can fall back beneath 500,000 contracts from the present 529,000. 

This 30,000+ long contract liquidation by The Specs would permit The Banks to hide 30,000+ shorts…all of this before future rally sets in.

And how way would possibly gold costs fall if The Banks will pull this off? Well, even as in could and Gregorian calendar month, not too way very. 

Note that those 2 previous riggings solely emotional value concerning $35-$45 below the 200-day before it turned and rallied. the same drop currently would target the $1230 space however I don’t assume it'd build it quite that way. The chart below shows substantial, long-run support within the space close to$1240, instead.

None of this changes, of course, our 2017 forecast created back in Gregorian calendar month. Back then, we tend to speculated that value would advance through 2017 during a three-steps-forward, two-steps-back kind of pattern with the year’s highest costs coming back within the fourth quarter. 

Let’s simply wait currently to check if The Banks are able to cowl a lot of of their short positions before this final leg of the 2017 gold rally begins. – Craig Hemke

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