Mayday markdowns

Gold is consolidating its rise from mid-December. The May Day holiday in China and with much of Europe shut as well, was an opportunity for the Comex shorts to punish the longs.

This morning marks the ninth trading session since gold briefly hit $3500. And yesterday saw a dramatic markdown which commenced after the end of the previous afternoon session on the Shanghai Futures Exchange. This morning, gold was trading in Europe at $3255, down $65 from last Friday’s close. And silver traded at $32.55, down 52 cents on the same time-scale.

It was the end for May contracts on Comex. The previous Thursday saw options expiry, which goes some way to explaining why gold was hit hard after rising to $3500 the day before. So, first it was options expiry, pause, and then contract expiry. These negative forces are now behind us. Incidentally, current Shanghai futures run to the 15^th May offering short-term leverage to Chinese speculators, should they wish to return as buyers next week.