Somebody Is Selling Gold

The price of gold is down for the last three days in a row, assuming it closes lower again today, as it is trading down again. Note also in the circled area of this chart, that the Klinger Volume indicator is signaling significant volume-based selling of gold. Note also that the price of gold has reversed and is contained within the trading range of the light blue trend lines that have contained gold prices since approximately late November 2007. I will be watching closely for signs of a consolidation or the emergence of fresh buying activity, which will most likely appear first on the Klinger Volume indicator.

This selling activity is somewhat surprising, given the continued devaluation of the US Dollar and promises of additional Fed easing. I suspect this is probably more likely a consolidation based upon fears of recessionary demand easing, rather than a strong phase of gold distribution. But that just a hunch, and nothing more. I recall that weeks ago, before the latest rise in gold prices, the Klinger indicator turned up before prices did. I would expect that perhaps the same circumstance would emerge again in the future.

Here is a Bloomberg article confirming my thoughts:

Gold, Silver Prices Fall

Stocks Still Stink! No Break-Out Yet!

Even following the bullish revelations about a potential bail-out or fix for some of the bond insurers last week, stock index futures continue to trade within an extremely tight range, according to the most recent charts. Note that the Bollinger Squeeze indicator has turned to red dots (blue rectangle), indicating that volatility is too low to trade on the daily charts. The Bollinger Bands themselves are contracting even more, and stock index prices are trading within a remarkably tight trading range. Neither the bulls nor the bears are prevailing in this battle yet.