Gold prices have consolidated in the $1,700 to $1,750 range as investors liquidate the yellow metal during the hedge fund redemption period. Historically, hedge fund redemption have come in the fourth quarter, especially when funds have underperformed. 2011 has not been a robust year for those who charge a 2% management fee and 20% incentive fee.
With redemptions, come the liquidation of the strongest financial products. Gold has had an amazing run during 2011. It is current up nearly 30% and was up more than 45% at its highs. Investors who are liquidating are selling off hedge funds who are exposed to the yellow metal.
The reception selling will likely end by early to mid November, and then gold bugs will have an opportunity to push gold prices back above resistance. A technical break above 1753, will confirm a breakout and a likely test of the 1850 region.
The trade – purchase a daily binary option call on a daily close of gold above 1754.
Signal Summary
Asset : Gold
The trade : Binary Call Option
Expiry time : End of day
When : on a close above 1754
Result : This signal expired out of the money
