July 18th, 2010 | 
Author: 
"The way you have broken up the results by instrument traded is a great idea, particularly when reviewing ones trades to spot areas of weakness"
Weekly Report w/e 17 July 10
Trading on or before the news?
The gold market sold off heavily on Friday closing below key $1,200 support. A follow through of the sell off a few weeks ago perhaps, after a pause.
We entered this trade on technical reasons but interestingly it was a news event that triggered the sell off.
The Bank of International Settlements disclosed that they were holding 20% of annual production of Gold and they must have obtained this from distressed banks who put it up to stave off insolvency.
This is interesting as it highlighted that should any of these institutions fail then the BIS will have no choice but to unload this Gold hoard onto the international gold markets and so, the theory goes that this will depress price.
Well, I am sceptical of this as they would obviously do this in a controlled, staged way – instead I believe the sell off was in tandem and as a result of the recent US Dollar weakness – and a move away from the 'risk aversion' trade where the US Dollar and Gold benefit – and this is something that could continue in the next few (hopefully) not so quiet weeks over the summer.
Posted in o. Weekly Roundup