Gold Selling Off…But Is It Over?
Gold has sold off over $200 the past two days, the most we have seen since 1980 after reaching an all-time nominal high of 1913.25. But is it finished? The chart below shows that we are pulling back toward the daily S2 pivot support, which is essentailly the same place where we started prior to the S&P downgrade of the US credit rating!
Earlier this week, the markets may have been anticipating that Bernanke is going to lay out plans for further monetary easing. That sentiment seems to be waning. So inflation fears have lessened and hence the sell-off in gold.
But curiously, the CME raised the margin requirements to trade gold, essentially decreasing the amount of gold that can be held for a fixed Dollar amount. This is intended to shake out the speculators and help return to a more orderly market. Yet this move was initiated last night, AFTER the price gold had already sold-off significantly.
So is the CME signaling that perhaps they believe that we still may see some talk of monetary easing tomorrow?