Small Profit-Taking on Gold Position

Wednesday, October 14, 2009

I took a very small portion of my gold trade off in profits today. I will look to add back on a pull-in but wanted to lock something in at $104 after the 8% rise over my cost basis. The dollar took out the lows of the year last night with the bullish ETF (UUP) trading down over half a percent today failing to hold the double bottom attempt. The large volume at $22.54 gave me pause and I watched to see if the dollar would break the steep downtrend it has been in since the March highs. But, the dollar has now failed and much more downside is likely as traders that took a stand at the lows are now forced to hit out of their positions.
I had thought the breaking of the lows on the year would be a significant catalyst for gold prices...but GLD is trading down this morning. With the dollar down and equity markets up, the pattern we have seen for several weeks now would indicate that gold should be trading higher. Apparently, this pattern has changed somewhat and I am taking note. I am thinking that gold prices anticipated the dollar's break through lows so we are seeing some selling as the scenario plays out. I believe gold goes much higher in the longer term but some time of consolidation may be needed, as the change in this pattern is telling me.


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