The massive impulse in gold demand from ETF and comex flows could be coming to an end, in line with historical analogs as safe-haven flows tend to be short-lived. However, the bar is also razor thin for substantial trend follower liquidations in gold, while consumer demand is now showing signs of weakness following the surge in prices.
While a coordinated buying impulse from a broad group of gold traders had helped gold prices rise dramatically in past weeks, we could now see a coordinated reversal in flows.
To start, a break below $1914/oz would catalyze a substantial selling program.
If the market has started to discount a future in which the growth shock could fade at a faster pace than the inflation shock, as we expected, then gold prices could be especially vulnerable to a more hawkish Fed profile, opening the door to a deeper consolidation.
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Check out the chart below. That 1914 level was pierced overnight (Tuesday Europe/US time). The price recovered and since the retest of the level has since steadied. Comments from tech analysts welcome! I've posted a 15min candle chart. For no reason except to highlight how price behaved around that level.
