- Short covering rally running out of steam
- Managed money (hedge funds) are fully long with downside risk increasing
- Fundamental and physical market has yet to adjust to higher prices
- Speculators are the driving force behind the recent rally
- Technically, price action will need to see a significant cut in production (to balance supply and demand equilibrium)
- Concern on China hard landing persist as it transition from manufacturing to service based economy
- Dead cat bounce over – fundamental to take back control of price action
- A healthy pullback will ease, perhaps allowing longs to rebuild and reload
Next directional move will determine one of the following factors:
- Range trading as price fluctuate and consolidate – fundamental picture improving with upside remain limited
- A retest of a new low but global demand should help minimize the damage as long as Central banks stick with monetary easing and there is a significant cut in production
The Bullion Times 