Five Reasons Gold Has Been Dropping and The Most Likely Reason of All is # 5

Last nights website update gave 1318-1328 as 1st resistance and the high so far is 1318. Support was listed at 1290-1300 and the low so far is 1306.

For those trying to understand why gold might be dropping so far so fast, let’s go over the potential’s.

First there’s the April contract that ends futures trading on the 31st and the rollover to June is underway. Not always, but often there are price weakness observations when some sell the April but don’t roll to June right away. They try for a 20-40 dollar lower price. Perhaps that is what is going on so far this week. In any event, we need to beware.

Second is the short term cycle low is due the March 30th (plus or minus 72 hours). That puts the window open on Thursday March 27th for a low. Can it come early or late ? Yes, of course. This window is the standard deviation between the ideal date for the lows. (The last blue cycle was on the exact day --- March 16th).

Thrid, the seasonal was late for gold (not silver) but now it has made up the time in price. A low is due this week/next week.

Fourth, and what we always worry about --- LIQUIDITY (a la 2008). See below article. In itself it’s not panic yet, but things are worrisome in China. You’ve heard of the COPPER plunge as they use it hypothecate loans. (Do you think they don’t use gold?). I don’t have that answer, but if they do, it sure is a good reason why gold is down 90 dollars in the past 6 trade sessions. 

OUR FINAL REASON --- is the MOST LIKELY--- AND THAT ONE ALONE COULD ANSWER ALL OF THE DECLINE.

Fifth, April Gold Options expiration is---drum roll---on mid Week Wednesday. What a perfect time to blast gold under 1300 ---- clear out the holders and the final set of stops --- and then move higher beginning on THURSDAY --- the first day of the short term cycle window. How many times have we seen this in the past?