Gold Breaks Out To New High!
Keep an eye on Gold Equities, they will break to the upside very soon!
our top picks are
Newstrike NES.V
Torex TXG.T
Oromin OLE.T
Teuton TUO.V
Treasurey Metals TML.T
(Kitco News) – Open interest, which is the number of futures positions that are open, in gold futures have hit record high on the Comex division of the New York Mercantile Exchange.
That, analysts said, reflects the increasing public appetite for gold. It is a bullish sign, they added, although a large number of speculative positions also means potential for a correction lower if some traders sell to capture profits.
Comex data is always released for the prior business day. Thus, the most recent report for Monday showed gold-futures open interest hit 616,130 contracts, said a spokesman for CME Group, which operates the exchange. This exceeded the previous record of 605,792 from June 30.
The numbers confirm new participants have been entering the market on the recent rally to record-high prices, analysts said.
“It doesn’t surprise me by any means. It’s supportive for the market,” said Frank Lesh, broker and futures analyst with FuturePath Trading. “But it also says maybe we’ll get to an overbought status here.”
Higher open interest, along with higher volume, moving averages and closes, are “bullish signals” for those who trade on the basis of technical momentum, said George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures.
“It is a bullish signal,” he said. But, he cautioned, “sometimes when you have a very bullish signal, it invites a lot of profit-taking.”
Still, the potential for near-term profit-taking may have alleviated some overnight when gold futures initially fell, before later bouncing, Lesh said. Comex gold for December delivery fell as far as $1,276.20 an ounce early Tuesday, before recovering and going onto a fresh record for any most-active contract of $1,311.80. The contract was recently up $11 from Monday’s close, trading at $1,309.60.
Mike Daly, gold and silver specialist at PFGBest, said the open interest reflects just how much attention the market is paying to gold, particularly amid economic uncertainty and sovereign-debt concerns in many Western nations. “People understand gold and silver, and diamonds as well, retain their value in times of crisis,” he said.
Some describe gold as “top-heavy,” he continued. “And you know what? They’re right. But the bottom line is the underlying fundamental of demand is keeping the market propelling forward. I think indications are that will continue.”
This especially is the case following a soft U.S. consumer-confidence report Tuesday, he said. Silver is also being bought as a cheaper alternative since $1,000 can buy many ounces of silver but not a full ounce of gold, he continued.
“Nothing goes straight up. You’re probably going to have some market corrections here,” he said. “But the price of gold right now has the interest of the world.”
