On the heels of the recent rally in gold, many are asking if we are seeing short covering in the gold market. Here is one indication that may in fact be the case.
Short Covering In The Gold Market?
August 27 (King World News) – The following is from Jason Goepfert at SentimenTrader: “Short covering. The Optimism Index on gold has moved above 30 after dropping below 20 in the past week…
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Gold Sentiment Off Recent Historic Lows
Five Similar Signals
There have been five similar signals since 1991, leading to a positive return over the next three months four times, with one minor loss. Its risk averaged only -1.8% versus reward of +5.4% as sentiment continued to recover in the months ahead. The dates were 1997-02-18, 1997-12-24, 1998-01-20, 1998-09-08, and 2001- 02-27).
King World News note: So far the $1,160 low in overnight trading in Japan continues to hold. We will have to look for a surge into the $1,225 – $1,250 area to see if we are in fact seeing shorts beginning to cover their very large historic short positions in the gold market. If the short covering turns into a stampeded for the exits, things will get exciting in the gold market in a hurry.
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