Today selling pressure returned with a vengeance. As of 4:10 PM EST, gold futures basis most active December contract is down $29.30, which is a strong decline of 1.49%, and is currently fixed at $1940.40. Considering that on Monday gold opened a few dollars below $2000, gold has given up almost $60 in trading this week.
Obviously, trading capital by market participants was laser-focused on selling into gold’s recent gains, and on a short-term basis this makes sense. However, the quick switch in market sentiment regarding geopolitical tensions might be short-lived as the global landscape continues not only to simmer but could quickly approach a boiling point.
The war in Ukraine is still potently active, and the conflict between Israel and Hamas has turned into an all-out war.
Yesterday NATO Secretary-General Jens Stoltenberg said that the Russian President, Vladimir Putin, has made “the world more dangerous” by his decision to void an international nuclear agreement. These statements and actions were magnified with comments by Dmitry Medvedev, the vice-chairman of the Russian Security Council, this week suggesting that further NATO escalation could result in Russia’s use of nuclear, biological, and chemical warfare.
These actions suggest the geopolitical landscape continues to magnify, as conflicts spread throughout many parts of the world.
While traders’ capital was overwhelmingly selling into gold’s recent price move above $2000, market participants must see this as short-term market sentiment. This is because I fear long-term, the complexities of the geopolitical landscape continue to become more alarming.
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Wishing you as always good trading,
Gary S. Wagner