by Alasdair MacLeod
Gold weakened during May by about $100, from a high point of $1300 to a low of $1200.
This, for technical analysts, is entirely within the normal correction zone of a third to two-thirds of the previous rise, which would be 84 to 167 points.
So the fall is technically reasonable, and doesn’t in itself signify any underlying challenge to the merits of a long position in gold. However, when looking at short-term considerations, we should look at motivations as well. And those clearly are the profit to be made by banks dealing in the paper bullion market, which they can simply overwhelm by issuing short contracts out of thin air. This card has been played successfully yet again, with the bullion banks first creating and then destroying nearly 100,000 contracts, lifting the profits from hapless bulls in the Comex market.