Gold Eyes Biggest 3-Day Fall In 28 Years
September 26th, 2011Warning: This is not a recommendation to buy, sell or hold any financial instrument.
Update: Bullish Gartley
Squinting at it on the daily now, I’d call it a quasi bullish Gartley. To see it, I had to exclude the candle shadow from the September high, and the fib ratios aren’t right. Still, close enough. Remember, this isn’t physics.
—End Update—
It sliced through the standard Fib retracement levels for the last weekly interval ramp higher like a hot knife through butter.
There’s currently a wild (short covering) rally underway that touched off from the 88.6% retracement. I’m just mentioning this as a curiosity for any Fib heads out there, as it came within about $4 of that 88.6 and put in a V shaped short-term bottom at $1532. I have no idea if that’s going to turn into a good support or not.
Via: Reuters:
Gold was set for its biggest three-day loss in 28 years on Monday, as investors fled commodity markets in a scramble to secure cash in the face of mounting fear over the impact of a potential Greek debt default on the rest of the euro zone.
European policymakers began working on new ways to stop fallout from Greece’s near-bankruptcy from inflicting more damage on the world economy after stinging criticism for failing to stem the debt crisis.
European equities fell, while industrial commodities such as crude oil and base metals bore the brunt of investor desire for cash in the face of mounting uncertainty.
In the last three days alone, gold has fallen by nearly 10 percent in its largest three-day slide since February 1983 and implied volatility has risen to a 2-1/2 year high.
Spot gold was last down 3.0 percent on the day at $1,621.49 an ounce by 0903 GMT, having fallen earlier by as much as 7.4 percent, putting the difference between the intraday high and low at $128.40, the largest daily price swing on record.
From Jesse’s Cafe Americain:
Tomorrow is option expiration on the Comex as we might have expected. I would hope that long term investors would take advantage of these price drops by locking in physical bullion purchases when they can.
However, it is hard to do this with the leverage and margin requirements on Comex especially on the overnight globex trading session. How can an average trader hope to maintain a position? And that is the basis of their schemes.
“It is not immediately clear at this juncture who was selling or why – but in placing such a huge order into the market when the least number of market participants were active tells you that they were out for dramatic effect.
Anyone looking to offload significant amounts of metal at the best possible price would have done so when both London and New York were both open – this would have ensured they would have hit the market when it was most liquid and ensured they got the best price for their sale.
Clearly finessing gold into the market was not their motive – they wanted a statement.”
Ross Norman, Sharps Fixley
http://jessescrossroadscafe.blogspot.com/2011/09/gold-daily-and-silver-weekly-charts_4278.html