Wednesday, October 5, 2016

Gold Shows Risk As Central Bank Story Peaks

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*Global central bank easing is peaking which can cap gold's price.
*We've shown how gold prices failed chart points and formed a downtrend.
*Yesterday's move was part of that bigger story.


On September 26th when was 127.55 we wrote,
"Our bias though is that there is more downside given the changing central bank story."
GLD closed yesterday at 120.97. The main reason for the gold drop was a worry that the ECB (European Central Bank) would pull back from its bond purchase program. That was precisely part of our concern. US Federal Reserve Presidents also came out hinting to confirm a rate hike this year. Gold's strong move up this year was helped by central bank ease. As this story changes gold prices can continue to be capped out.
Review
After being bullish on gold we pointed out that gold failed our key level onSeptember 12th.
Here was the chart as part of that September 12th report.
Source: Interactive Brokers
When we expected downside September 26th this is the chart (below) that we showed at that time.

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