Gold Prices: Here’s Why They’re Stuck in a Rut

If you thought gold trading was difficult in November, you were right.  Not just right in a small sense, but in a historical sense.  Your Gold Enthusiast warned several months ago that trading was slowing down, and November results only accentuated the trend. ScrapRegister reports that November 2017 had the tightest monthly range in gold prices for the past 12 years.  Here’s the chart of GLD for the past 10 years with 1 bar for each month.  Notice how short the last 2 bars on the left are – those are Oct and Nov 2017.


What this has meant for traders is a lack of follow-through in any sort of gold moves.  And in the past month, there have been very few breakouts of even a few cents above or below the current trading range.  Fortunately, the lack of volume (indicated by the bar heights along the bottom) has warned anyone paying attention not to get over-eager in their trading.  There have been a few range-trade possibilities, but sometimes it’s smart to just sit back and wait rather than get sucked into a low-probability trade.

Boring yes, but it beats losing money!

It’s not as if there haven’t been reasons for gold to trade higher or lower.  Rumors abound that banks are heavily short gold – still looking for good evidence on that one, but it makes sense.  This would tend to push gold prices down.  And the start of Quantitative Tightening, in the form of Fed interest rate raises and selling QE-bought bonds, could drag on the current bull market. That should push gold prices up.  And those are just the start of the list…

So while gold fights in its range, we look out across the news landscape on a Friday morning and see little that would change things.  It might just be another good day to find something better to do than watch trades tick across a glowing computer screen. The day will come when gold will move again, yet in those immortal sci-fi words we have to conclude, “but not today”.

Have a great weekend, and we’ll be back at it Monday.

Signed, The Gold Enthusiast

DISCLAIMER:  The author is long NUGT and JNUG, has open call options on NUGT, and may add to or sell these positions in the next 48 hours.  These are tiny, wouldn’t-move-any-market size positions.

Related: Have We Hit Peak Gold? 

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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