Why there could soon be a spectacular move in gold

Gold traders are abandoning their short positions in droves. But is their excitement premature? John C Burford looks to the charts for a clue.

When I last wrote about gold, the market had plunged from the $1,790 February high to meet major support just above the $1,500 level.

In ten weeks, the market had lost around $250 per oz (14%) and had driven momentum to low levels.

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(CONTRACTS OF EUR 125,000) OPEN INTEREST: 435,706
COMMITMENTS
169,55154,40040,854172,750308,348383,155403,60252,55132,104
CHANGES FROM 05/15/12 (CHANGE IN OPEN INTEREST: 13,615)
5,5004,4915,4252,134-1,18513,0598,7315564,884
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADERS
38.912.59.439.670.887.992.612.17.4
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS: 300)
15175845545238180Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.