gene arensberg says the large commercials are going to defend $1230 gold (and where gold goes, silver usually goes)

Gold tested the $1,230s on Wednesday, Thursday and Friday following this COT report, but as it did it met with fairly determined “opposition.” We know now that the opposition was likely coming from both classes of commercial trader on the COMEX, division of the CME.

The bottom line is that even though we believe there is still considerable bull side firepower left to deploy, apparently both classes of COMEX commercial traders believe that gold has moved high enough that they were comfortable taking the short side of nearly all the “new” COMEX gold action. The LCNS did not increase MORE than the open interest increased, and ALL of the sell-down attempts this trading week failed to get any downside traction. But the fact that both the PMs and the SDs were on the “same team” this week is a “tell.”

It’s time to protect at least partial profits and to raise our trading stops on our new gold trade until we can see the next round of COT data. More about that in the Summation section below.

Does that mean we now expect a gold sell-down? No, not necessarily. It is just that a sell down would not be as surprising as it would have been last week or the week prior. Just about anything is possible in the short term. With contract expiry looming just ahead, weakening economic data here in the U.S., and with silver unable to “answer” gold’s recent gains, we would be remiss if we didn’t become more cautious just ahead.

Our view is that the COT action for gold is neutral to slightly more bearish than bullish very short term, but we remain of the view that significant dips should be well bid just ahead. Longer term the Great Gold Bull marches on.

http://news.goldseek.com/GoldSeek/1282571857.php