From ZeroHedge:
About Those Gold Shorts....
One wonders: at what price does the squeeze of the collateral-scarce (as per today's ongoing negative GOFO) yellow metal begin, now that Bernanke has made it clear (supposedly) that the new gameplan is just more of the same old?
$1284.90 at pixel time. Here's the 5-minute chart from FinViz:
That top tick was $1297.20. Back in late June there were a couple days that stalled out at $1300. Get through that and the upside target of $1360 looks attainable.
I don't know who was short, most of the funds were flat or long and the Financial Times on Tuesday went so far as to write, in "Gold borrowing cost hits post-Lehman high":
...The lack of liquidity in the leasing market has pushed gold forward rates, known as “gofo”, into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices – a rare situation that has occurred only a few times in the past 20 years. The last time forwards were negative was in November 2008, when a scramble for physical gold spurred a sharp price rally.
Traders said that investors were alert for the possibility that the current tightness could trigger a squeeze among hedge funds with short positions in gold, potentially driving prices higher. “It has piqued people’s interest”, said one senior precious metals banker. Gold was trading at $1,248.50 a troy ounce on Tuesday, up 5.8 per cent from a three-year low at the end last month.
Nonetheless, few believe a rally would be long-lived. “Every rally we see is a short-covering rally which quickly evaporates,” said Mr Rose of HSBC....
