Gold Finished much lower!!!

I should note here that whenever you hear pundits pronouncing the death of the commodity bull, go and take a look at the longer term weekly and monthly charts. That will put things in perspective. Corrections occur in every market and provide opportunities for those who have a firm fundamental view. Those are who late to the party inevitably get caught holding the bag and end up paying the price as they get taken out to the woodshed and given a beating that they will not long forget. Meanwhile, the grains are beginning to look like the selling frenzy in there might be abating. Corn in particular has gotten the stuffing knocked out of it having basically gone straight down for the last month without even a pause. Once the grains stabilize, the CRB and the CCI will as well although the excessively heavily energy weighted CRB will struggle a bit more until energy prices level off. The long term demand for commodities is not going to go anywhere and once end users feel that the excessive hedge fund and index fund holdings have been purged out, they will move back in and secure long side coverage.

It goes without saying that the short term technical damage done in gold is quite severe at this point. It will now have to get back above $950 basis August to entice new momentum longs and spook the plethora of brand new shorts who once again have been selling into weakness chasing it lower. That has not been a profitable strategy in gold since 2002. Please see the chart as I have marked some of the support and resistance levels. On any potential test of support near the $916- $920 level, gold will need to find strong buying or it will slip back to $900 once again. I might mention that gold is trading exactly at the 50% retracement level of the last move up from $860 to $990. Many traders like to move into a market at that level to increase their exposure or to add new longs after missing the first ride up. Open interest readings indicate that we have an entire party room full of brand new shorts in the gold market who are eager to see an end to the bull run. They have been piling in as fast as the longs have been running for the hills. We will see with what success they meet.