Gold pushes higher
Gold continues to fight back following the horrendous sell-off at the beginning of last week. Like many markets, gold tends to go up the stairs, but down in the lift, which can lead to some dramatic falls. It is also highly dispiriting for the bulls when they see a month’s-worth of small-step gains wiped out in a few hours. But this type of market move does tend to shake out the weaker hands, and thereby leave a more robust base for more committed traders. The danger is if that commitment turns to pure stubbornness, when traders hold on to positions even when the charts are urging caution. That doesn’t appear to be the case now, given that gold has managed to hold above support and doggedly pushed higher. But that could change quickly should there be another sizeable pullback which sees prices break support significantly, and on a protracted basis. $2,600 is an obvious level to watch, as this level held as support in October and again at the beginning of last week. But it also failed to hold earlier in November when gold traded below $2,600 for the best part of a week before recovering. What to do? This is when risk management and one’s own specific money management rules cross over. Traders need a plan. And that requires preparing for large negative moves, sizing your positions accordingly and trading with stops.
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