The Daily Market Report: Gold Retreats in Repeat of Last Friday’s Price Action

USAGOLD/Peter Grant/11-10-17

Gold is down intraday after a large sell order hit the futures market, knocking the yellow metal back into its well defined range. Zerohedge reported that someone sold 30,000 contracts ($4.2 bln notional value) in just a 1 minute period.

That’s about 10% of the average volume for an entire day. We’ve seen this before though and as we’ve pointed out in the past, it smacks of agenda driven selling.

I’m comfortable saying that because we never see this sort of nonsense on the long side of the gold market. A real trader doesn’t dump 30,000 contracts in a minute if he or she is looking to short at the best price, or close out a big long position at the best price.

Today’s price action prompts me to point you to the Dave Kranzler article I posted yesterday: Gold And Silver: Something Different Is Occurring. Kranzler discusses the open interest situation that has developed that typically has lead to one of these “take-downs.”

Historically this is the signal that the Comex banks will implement what I call a “COT open interest liquidation” take-down of the gold/silver price using Comex paper to trigger hedge fund stop-loss positions. This enables the Comex banks to cover their shorts and print huge profits. It’s also illegal trading activity but that’s for another day.

As I pointed out earlier in the session, today’s price action was eerily similar to what unfolded last Friday around the same time. Kranzler commented on the 03-Nov price action:

Unloading on the price of gold like this on a Friday, after the rest of the trading world – and specifically the physical-buying eastern hemisphere markets – has closed for the weekend, is typical. What is not typical, however, is the reversal of the price of gold which occurred the next trading day (Monday).

Today’s intaday sell-off stalled well shy of last Friday’s low at 1264.70, perhaps lending credence to Mr. Kranzler’s overarching theme that “something different is occurring.” These assaults on the gold price are becoming less effective.

It’s going to be interesting to see what impact today’s selling had on open interest, and perhaps more importantly, if buyers once again view this action as a gift come Monday. With key U.S. inflation data on tap next week, there is some potential for further expansion of at least the range, within the range, within the range.

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