You have to be a daredevil or a masochist to trade the daily “paper gold” chart. That game is rigged against you and in favor of the trading house who collects regardless of the outcome of your trade. They affectionately refer to this as “churn.” If you must trade, at least use the weekly chart and buy the over-sold technicals and sell the over-bought.
Gold currently seems unable to better the level near $1750 which is proving to be rather stubborn. There appears to be a bit of a headwind arising from lingering fears about Greece and a potential slowdown impact on the global economy as debt issues remain in the back of traders’ minds. That was trumped the other day by Chairman Bernanke’s promise of another 18 months or more of free money but in today’s session, apparently the effect has been somewhat muted. I am noticing that equities are lower today and the Dollar has managed a bit of a bounce with bonds moving up slightly off of their worst levels of the session and are now unchanged. One can spot the “risk aversion” trades in the session.
Trying to get a decent read on many of these markets is very challenging in this environment because there is an enormous tug of war from both the forces of deflation and the forces of liquidity. That has many traders sitting with their finger on the keyboard ready to run in either direction very quickly as what remains of conviction is generally easily swayed based on the latest headline or data release. The end result is that day traders are more at home rather than trend following systems which can easily be whipsawed and caught flatfooted.
On days like this I actually feel a bit sorry for the many newsletter writers who have to come up with some sort of baloney to explain price action in order to justify their subscription fees. Truth be told, sometimes there are just “a lot of fuss about nothing” days in the market when neither side (bulls or bears) really seems to have a clear edge and the markets end up marking time. This is the sort of environment which produces choppy trading patterns where floor locals make the majority of their income scalping or otherwise generally separating novice traders from their wealth.
Maybe we will ge something going later in the session. For now, the bulls are getting frustrated over their inability to beat back the selling at $1750. Support remains the same general region down near $1725 – $1720 where valued-based buying has been seen.