Volatility is still high in the pair as it broke the 61.8 fib of the move down from June at $1330. The latest push up topped out at $1340 and the top of channel from April.
The rise has also been stifled by the 55 dma currently at $1339.
The move up yesterday was the biggest one day gain since the June bounce from the low at $1179.
Along side the warehousing news in the US the short covering has also been attributed to the backwardation in futures prices and rumours of an impending COMEX default. COMEX is seeing inventories shrink at an alarming rate on the news as market participants become wary of a run on the gold banking system.
Aiding the gold rises are increased demand from the Middle East, Asia and especially China.
I love a tech trade in Gold and the Channel top has presented one, but given this news I would advise caution in the days ahead when trading the tooth filler.
If a default is confirmed then prices could shoot up drastically. While rumours still persist the risk is for further reductions to COMEX inventories, which will add pressure to the deliverable side of the exchange. Once an exchange gets into delivery trouble due to stock levels then panic can set in and the exchange has to adjust their settlement procedures.
COMEX and MYMEX warehouse gold stocks
The long and short of it is that the precious metal is focusing on different issues to the economic and USD moves that define the movements, in most normal circumstances.
Take care.
