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GOLD Explained: A Brief Note on Recent Market Action

Gold's failure to sustain its recent price gains, gains achieved over the past few weeks, triggered a wave of computer-generated technical selling on Monday morning that, in minutes, knocked gold prices back down to psychologically important technical support levels just above $1300 an ounce. I do not subscribe to any of the various conspiracy theories to explain gold's latest tumble, even though the recent news and gold-market fundamentals suggest the yellow metal should be moving higher. (For more on this bullish view, see "Gold: Now is the Time," NicholsOnGold, July 2, 2014.) The ...

Dark Pools, Program Trading and the Price of Gold

(This report first published and posted on May 15, 2013 — but is even more timely today!)   Day after day, gold trading has been, and continues to be, dominated by institutional trading in the “dark pools” where over-the-counter dealer and interbank activity goes largely unseen. Don’t under-estimate the influence of trading in the dark pools where “invisible” institutional trading can – in a flash – knock gold to the mat, leaving most gold-market participants and observers wondering what happened. Indeed, much of this activity in the interbank and dealer market goes unreported – but ...

The Volcker Rule: Implications for Gold & Silver

The Volcker Rule, banning the largest U.S. banks from engaging in speculative trading, has now been approved by the U.S. financial regulatory agencies – with important implications for gold and silver. The Rule, a provision of the 2010 Dodd-Frank Wall Street Reform Act, forthwith prohibits banks with federally insured deposits from trading activities undertaken for their own benefit. ...

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GOLD — What’s Going On?

Gold prices have caved today under pressure from dollar appreciation and wave of technical selling at key chart points - selling aggravated by continued flow of funds from gold (and commodity indexes) to equities. Just as the rising price trend in the equity indexes has attracting more buying, the renewed downward momentum in gold is engendering short sales and more outflows from gold ETFs. Importantly, program trading and other technical strategies have added to the downward pressure on gold - and continue to do so.  (See my previous commentary posted earlier today for more on program ...

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Dark Pools, Program Trading and the Decline of Gold

Day after day, gold trading has been, and continues to be, dominated by institutional trading in the "dark pools" where over-the-counter dealer and interbank activity goes largely unseen. Don't under-estimate the influence of trading in the dark pools where "invisible" institutional trading can - in a flash - knock gold to the mat, leaving most gold-market participants and observers wondering what happened. Indeed, much of this activity in the interbank and dealer market goes unreported - but buy-sell transactions, high-frequency, and other program trading in these dark pools, often at ...

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GOLD: Where’s the Mojo?

Just when many gold-market participants and observers thought it safe to wade back into the long side of the market, the metal has taken another dive. Having begun 2013 near $1,650, gold prices are now off about 15 percent for the year to date and some 25 percent from its all-time high just over $1,920 in September 2011. A number of writers have already declared the end of gold's decade-long bull-market run. And, even some of the most outspoken gold bulls are worried that the yellow metal has lost its mojo. Having failed to build upon the nascent upward momentum and unable to move back ...

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GOLD — Confounded by the Machines and Dark Pools

Gold continues to confound, dropping another $25 an ounce this morning as technical and computer-driven program trading triggers selling on U.S. derivative markets, all despite favorable fundamentals and what should be seen as favorable economic and geopolitical developments. Gold Lower Despite Bullish News This morning's dispatches from India and China, the two biggest gold-consuming nations, report that demand in these markets continues unabated . . . and coin dealers report still-strong retail demand for bullion coins and small bars in the Western markets. News from the Middle East -- ...

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