This has potential bullish implications as there was massive deleveraging of a spread involving the gold volatility index trading on the Chicago BOE as long volume positions were dumped after gold had concluded trading for the day. Since there had been rumors that a major fund would call for delivery of Dec gold, it is possible that someone got verification of this in the afternoon and spreads that were short gold scrambled to deleverage prior to the weekend...too late to cover/buy gold, so sell the other side of the spread.
There had been a massive attempt to take gold down today [historically the slowest volume day of the year] with thousands of contracts shorted in to the Comex session. But gold did not collapse and in fact closed the session up some $13.50 off its low and down only about $10 on the day.
Bottom line is that there could be massive gold short covering Monday morning IF the rumor was indeed the reason behind the bizarrre unwind . We will look to see if the Dec. contract takes off when the COMEX session opens at 8:20 EDT. And this could even occur after a strong overnight market in anticipation of such.
A final hint that the rumor could be true was that someone bought 2000 February contracts [200,000 oz =$272 million] just before the COMEX session close...very odd trafe for the slowest trading day of the year. So, perhaps someone with big pockets knew of the deleveraging that was about to occur with long indexes/short gold spreads, and went very long gold in anticipation of fireworks next week.
This all sounds promising but the downside is that all of this is based on an assumption that some large fund is indeed planning on taking a large delivery in December. Take this element away and other explanations come into olay....and I have just wasted 20 minutes of sleep.....pic
