Is gold heading for my $1,400 target?

While the rally in gold looks promising, the market is not without danger. John C Burford assesses the risks of his next trade.

The gold market is showing some interesting patterns. The market on the daily chart is in a clear downtrend:

13-8-5-MWT-1

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(Contracts of 100 troy ounces)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 397,035
Commitments
154,519126,15319,841188,832214,606363,192360,60033,84336,435
Changes from 07/23/13 (Change in open interest: -37,715)
-6,678-853-5,450-21,401-30,323-33,529-36,626-4,186-1,089
Percent of open in terest for each category of traders
38.931.85.047.654.191.590.88.59.2
Number of traders in each category (Total traders: 274)
10591665557192186Row 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.