Signs of life are beginning to emerge in gold that give us an indication the correction is nearing its end.
First, we examine the gold chart and the patterns indicating the correction is waning.
Second, we look at backwardation between the spot and futures price that has been occurring this week, and why that is a bullish sign on higher gold prices.
Third, we look at both the CFTC COT report and the banker’s participation report and show that the banks are reducing their short positions in gold relative to previous periods by an amount that indicates they are moving more to the long side.
We look at gold deliveries on COMEX for March, not expected to be a heavy delivery month, and show why those numbers plus EFP (exchange for physical) indicate that COMEX lacks liquidity. In other words, more demand than supply there.
Lastly, we look at options positioning as a sign that the longs are taking momentum on short term bets on gold. While the shorts are still strong, longs are lining up in spades above the $1700 price level expecting a bounce in gold’s price.