Gold is getting whacked Monday night, presumably because the fever of war in Iraq has cooled somewhat. As we might have predicted, crude oil quotes have eased only slightly. Most likely, this is because energy traders are not so stupid as to breathe an ostentatious sigh of relief merely because Baghdad has not yet erupted in flames. Perhaps this won’t happen; instead, the 5000 ISIS radicals will get slaughtered by Shiite militiamen, to the unexpected delight of the geopolitical word. That would play particularly well in America, where tragedies with happy endings have become a staple of Hollywood. On Wall Street, however, it is the stuff of which short-squeeze rallies are made. But clearly not in bullion.
The chart shows where August Gold’s troubles began: a tad shy of a Hidden Pivot target at 1287.40. Targets that clear and compelling should not just be reached, but exceeded, if bulls are about to romp. In fact, shortly before midnight the opposite was about to occur — with a retracement that looked likely to exceed its target, 1265.80. The so-far low is three ticks above it, at 1266.10 — a good place to have tried bottom-fishing with a ‘camouflage’ entry on the lesser charts. But if the ‘hidden support’ gives way, look for more selling down to 1260 or so, where bulls consolidated last week for a three-day rally that now looks to have been gratuitous.