Weekly: "Worrying Uptrends In Inflation Expectations Are Being Masked"
Gold's Rally Was Chinese in Origin
Plus: Hartnett’s Flow Show Report and Goldman weighs in on the UMich Inflation report
Gold Comment: Did They Already Buy?
Gold had a rough week. There are several explanations for the selloff, but no real excuses for it.
We are seeing a bonafide “The Fed is going to ease and there is no inflation behavior” which is flying in the face of evidence and certainly shouldn’t force more selling in Gold much less Silver.
It’s at about this point,we start to really question the likely flows into Gold this year in buy season; meaning there will be buying, but perhaps Gold really got ahead of itself with this $150 runup from $1830 last month. Most technicals will say it’s a healthy retracement, and it certainly could be just that after absorbing so much buying.
The Rally Was Chinese in Origin
But we’re not betting on it yet. The only thing that remotely makes sense.. and there is truth in it is this:
China or a client in China, took delivery of Gold late in October. This forced shorts to cover, and a tightness in physical metal that ramped us higher closing that gap between NY/Comex and SGE gold.
That much we are almost certain of as discussed here:
Exclusive: Gold’s Exit Strategy from The West
“[T]he Chinese have now taken delivery of a bunch of physical New York gold in response to that arb.” Housekeeping: The following is informed conjecture into the Gold markets based on history, experience, and sources with access to certain pieces of information.
What is concerning is not the sell-off itself, but the fact we feel underinformed as to who is selling.