Today's Action In Gold

From all indications, this is a co-ordinated sell-off via participating banks to move the gold price. Should the gold price have been lower by a significant margin, then this sell-off would have been catastrophic.

But since it follows on the heels of Barclay's admission to price fixing in the market, then whomever is left would be redoubling their efforts since gold price fixing is clearly coming to a close.

It looks like the end of a move from a daily chart perspective, and re-tests the breakout:

http://scharts.co/1pgteZw

On the weekly chart, the sellers are selling into a market where downward momentum has been in decline for months and has all but disappeared. The momentum line on the ADX has yet to reverse.

http://scharts.co/1iHb6W2

Long-dated futures have already recovered by the end of the day. You have to strip out the May contract from this chain:

http://finance.yahoo.com/q/fc?s=GCF14.CMX+Futures+Chain

Looking at spread trades in the nearest available futures, near futures are barely above the new active month. This has been a consistently profitable trade in the last year and is indicating a trend in gold prices towards backwardation:

http://quotes.ino.com/charting/index.html?s=NYMEX_GC.M14_Q14.E&t=l&a=0&w=1&v=dmax

You have to consider also that with derivatives and options on derivatives being traded OTC between banks and that these trades are mostly in futures for client contracts, that the monthly close is overwhelmingly important.

Thus the sell-off.

-F6