There's certainly no shortage of stories about relationships falling apart, but scarce are reports of couples hitting the skids and then falling back in love again.
For that reason alone, I view the reversal that market strategist Bill Baruch of iiTrader just pulled on gold as notable.
"What we believe now is that the landscape for gold has changed forever," Baruch says in the attached video, noting the near certainty in markets that the Fed will begin to reduce its $85 billion of monthly bond purchases starting September.
"Gold didn't press a new low compared to July," Baruch says. "It was a rejection" as the metal put together a six-week winning streak that saw every dip being bought. Since those lows in late June, the bear market metal (which is still down almost 30% in the past year) has surged 10% or $150 an ounce, and as Baruch sees it, now has more to go.
This summer love affair is in stark contrast with the prior call he made on Breakout in June when he was correctly looking for gold to continue breaking down, perhaps below $1150 or even as low as $1100.
To be sure, this CME-based trader's attention span, or in this case affnity, for gold is not the stuff of fairy tales. In fact, he's openly and opportunistically looking to play what he feels is a $300 trading range, at which point he plans to break the romance off.
Adding to his thesis is the fact that he see continued short covering in the Euro, which will keep the pressure on the dollar, and in turn, act as a tailwind for gold.
"What I am really worried about is seeing this market above $1,400 and a lot of people getting really excited and the snake oil salesman coming back," he says. "When people start loving (gold) and it looks great, that's when you've got to start selling it."
Baruch suggests anything above $1400 will be "an opportunity to get short again."
So much for long-term love affairs.
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