Investors sold gold Monday as good economic news dominated. International gold prices dropped below their 1255 support level, leading to a quick technical sell-off by algorithm-driven traders and black boxes. Your friendly Gold Enthusiast believes, as you doubtless already know, that while the markets are different today due to the rise in black box trading, humans still program them and thus what people think is still important.
The corresponding level in GLD is 120, so when GLD fell below 120 it triggered a big sell-off. Here is yesterday’s intraday price-volume chart for GLD. Look at the sudden spike in volume as GLD dropped below 120.
Clearly, someone or a lot of someone’s didn’t like it when GLD dropped. Or, they had a lot of gold sitting around and they wanted to drop the price… though that hardly makes sense.
If you follow the gold markets at all, you’ve seen hints and outright accusations that the gold markets are rigged. While we’re sure there is some less-than-honorable strategizing going on, a lot of gold’s current weakness can be explained by the raft of positive-ness in recent economic reports. Yes, you can read them as having lots of underlying bad news, but the perception people have is that economies are slowly improving and the world is not as uncertain as it appeared just a few months ago.