Consider the big picture shown in the inset before you ascribe any significance to Friday’s $22 plunge. Someone mentioned in the chat room that a big seller had dropped 5000 contracts into weak hands, but I pointed out that the bigger the seller on a given day, the less significant the transaction. The reason is that few who sell gold futures in such size as 5000 contracts are doing so unhedged, very probably perfectly so, and that it is why it is futile to try to read meaning into such transactions. For those inclined to worry anyway, the chart shows gold to be smack dab in the middle of a trading range stretching back to 2013. Moreover, there are no fewer than three big, uptrending ABC patterns driving the futures at the moment. It would take an uncorrected swoon breaching the two labeled lows to turn the daily chart bearish. _______ UPDATE (August 18, 9:28 a.m. EDT): This morning’s selloff has bounced from just below the 1297.00 midpoint support of A=1321.80 (8/14) on the hourly chart. This means that any lower will send the futures down to D=1282.60. ________ UPDATE (August 21, 11:05 a.m.): Gold seems incapable of rallying on days when stocks are moving higher, especially when the latter are pushing further into record territory. This morning’s selloff suggests bullion buyers are just too dispirited to resist the pull of gravity. With respect to the December contract, use a 1257.8o correction target, but expect still lower prices if it’s breached by more than a few ticks.
