GLD fills one of the gaps we speculated upon yesterday. Now the reversal and all's fine in Goldbugville? Maybe, given that yesterday was triggered by news and a policy maker's b/s, which is typically not sustainable.But what really made gold decline - along with most everything else is... yes, you got it; the air came out of this mess because unhealthy, soulless players who just could not stand watching the fun anymore have been grudgingly coming back into the markets. Their punishment was all but assured sooner or later. Gold has not been special of late, it has been another 'play'.
The momos should not want to see the upside gap filled yet but they are the momos and they will probably cheer this. So I will not be at all surprised to get the lower gap subsequently filled as well. Then? Higher we go sans the momos.
Edit (7:57) Adding Jon's thoughts...
Gold This Morning: Mama Said There'd Be Days Like This
Active overnight trade has us ~$10 above the early lows as buyers clearly are probing the degree to which we recover from our quick trip to the abattoir yesterday. GSR is ~56.50 and while we bounced around yesterday as hostile clashes were the order of the day, the number remains stubbornly at the liquidity level which clearly should eventually eviscerate those who became so unnerved by China's rate hike...as in oh-oh, how should I react? Of course, sell gold and get liquid...Open interest on Monday was up negligiblely attenuating the early bear bungee jump that day. Option vols came in around a point, so gather thee rosebuds while ye may. While the exaggerated reaction to the dreaded Chinese hike kicked off the gutting of gold, we got a little more assistance from failed asset manager and now Fed Gov, Richard Fisher, who earlier in the afternoon was roundly quoted as stating that the long awaited cruise to nowhere of the QE2 could be on hold, huh? Today, we are clearly in a recovery mode, but do note that yesterday's disembowelment has brought the RSI down to ~57, the level from which we embarked on our recent heady move in early September.
