Gold futures climbed to their highest levels in almost two weeks, supported by sustained physical buying and speculation about stronger demand from an expanded Chinese market.
Headline explanations or logic remind of the observation that truck pulling a riding lawnmower past freshly mowed grass had to have cut it. It doesn’t matter that the cutting widths are completely different.
The headline noise obscures the movement behind the curtain. As Jim suggests, connected money is repositioning into weakness in anticipation of the next advance. This is discussed in further detail in my The Management of Gold commentary.
I would like to add an additional note on silver. JP Morgan's large short position in silver, partially acquired through its acquisition of Bear Stearns and discussed by Ted Bulter in the following kingworld interview kingworldnews.com, needs to be covered. There's no way JP Morgan will be left holding the bag during a parabolic move. The following chart reveals the work that needs to be done in silver.
Silver London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest: