It was thus a very strange day seeing interest rates actually rising in the face of sinking stocks. If there was a safe haven today, it was the US Dollar all by itself as nothing else seemed to be moving higher besides the Australian Dollar and the British Pound.
Frankly I have no idea what was going on in some of these other markets so I am not even going to try venturing a guess. Just chalk it up to one of those days where not too many folks were very sure of exactly what they wanted to do.
One thing that many folks were sure of however was to sell the liquid energies, especially heating oil. That has been driven sharply higher on the severely cold weather engulfing the middle and eastern parts of the US, but some forecasters apparently took a bit of the severity out of the cold and that forced some profit taking by longs and some fresh shorting as well. The exact same thing occurred in the natural gas market today. Both these energy sources have been benefitting from the sharp cold but the first sign of more normal weather patterns/temperatures coming and more longs will be heading for the exits. The forecast models are always fickle ( as any grain trader and he will show you the scars from being on the wrong side of a "flip" in the forecasts ) so they might just as well show more cold tomorrow that is more bitter than today's models.
I have some friends up here who are burning as much firewood as we can in order to do our fair share to help our fellow citizens to the east which are getting the brunt of this walrus weather. If we can force enough fossil fuel fumes into the air, we should be able to kick up the global warming enough to warm things up for ya'll over that way. Hang in there and give us some more time to let the smoke plume move east.
I have posted up a very short term gold chart ( 4 hour) to note the resistance and support levels. I want to add here that volume in the February gold contract is going to be shrinking as we draw nearer the delivery process so it will not be long before I switch over to the April contract for analysis purposes.
Gold has obviously failed at its first attempt at $1,280. That was a big number on the way down so it makes technical sense to expect it to be a big number on the way up. The setback initially found dip buyers into the support band noted near $1255 but then failed eventually dropping below the zone in late trading as the gold miners failed as well.
There might be a bit of psychological support near $1,250 for gold but more substantial support actually lies closer to $1,245 or so. If that fails, expect gold to retest $1,235 - $1,230.
For the bulls to generate any more excitement on the upside they now have a solid barrier up near $1,280 that they will have to better.
The FOMC will add more uncertainty to the market this week ( as if we did not have enough of that already to contend with) so do not be surprised at some pretty large swings in price as traders react with the usual calm and measured demeanor that marks our profession ( this last part is pure sarcasm as everyone knows that there is no calm, measured demeanor left anywhere in the trading world nowadays).
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