Adam had a few thoughts on the New York times story alleging that Goldmans have been up to some shady shenanigans at their aluminium storage warehouses in Detroit. Goldman Sachs aluminum scandal could roil financials and commodity prices this week
Well, it looks like it’s having some effect but in the first instance not as we thought.
Gold rallied on the open last night busting up from $1296 to $1320 and reached a high of $1323.
In another show that tech counts for diddly squat when something big hits the market we broke the 50 fib from the Jun hi/lo at $1301 and the 200 h4ma at $1305
The next levels above to watch for are the 61.8 fib of the Jun move at $1330, the upper channel line at $1337 and the 55 dma at $1341.
The news story painted a picture that pointed to a move lower but it seems that the reverse has happened. What is important about this move, on such news, is that it has shown us is the positioning of the market. Instead of falling on both the initial news and the fact that an investigation can remove some premium from prices, we’ve gone up on short covering.
In bad news scenarios the first thing a market does is panic and cover. I have been of the opinion that the market still had a lot underwater longs waiting in the wings but it seems that the market has been largely short.
The moves have been mirrored in most commodity prices today with silver up 2.4% and 3 month LME aluminium up 1.1%.
The news is likely to inject some volatility into commodities if the story gains tractions over the coming days and weeks. Be wary of taking positions in the middle and look to edges and the tech levels to give best protection for any further shocks.