Last Friday's release of the Commitment of Traders report (COT) showed that, in the gold market, commercials are at a near-record short position (futures and options) while large speculators (hedge funds) are at a near-record long position. In the metals space, the commercials are the smart money. It looks to me that several things point to a pullback, possibly to the 1400 level for the yellow metal.
This 60-min GLD chart shows the potential for a head-and-shoulders topping pattern. It will take a move below 140 to trigger, with the measured move would being in the 133 area (charts courtesy of StockCharts.com, dated 9/23/19):
Looking at the daily chart of GLD, you can see that 133 also happens to be the 50% retracement of the move from the May lows to the September highs, a correction that would not be at all unusual after the extended move:
There continue to be many fundamental reasons for gold to continue higher, but, with the trade looking extended and crowded, it would seem a correction is a high-probability event.
Questions and comments are always welcome at ttaschler@sprottglobal.com.
Tim Taschler, CMT
Sprott USA
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