Rally erupted in gold market days after funds made big bear bet

Bloomberg/Susanne Barton and Mavin G. Perez/10-12-2018

“For a measure of how much this week’s surge in gold prices may have caught many in the market by surprise, consider that hedge funds had just made their biggest-ever bearish wager on the metal days before.”

USAGOLD  note:  Some of the abrupt turnaround, as we suggested in our Thursday update, might have been due to some of those same players reversing short positions.  Here is what it looked like on the chart including volume bars (bottom) and a partial repost of Thursday’s update for those who missed it:

“This is the first time in 2018, a cursory review tells us, that gold has gone up when the Dow Jones Industrial Average has gone down more than 1000 points – a break with recent trends that speaks to a possible resurgence of gold’s safe haven status. Too, we should not overlook the possible role of short-covering in today’s rally. Speculators have built-up a record short volume on the COMEX and will need to reverse those positions in order to lock-in profits. As an early indicator that sentiment might be shifting among funds and institutions, gold ETFs yesterday recorded net purchases of eight tonnes – “the first daily inflow since July” according to Commerzbank.”

More below. . . . .

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