All Signs Pointing to Lower Gold on Taper Talk

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Sept. 23 (Bloomberg) -- Bloomberg's Scarlet Fu and Bloomberg Tradebook's Greg Bender put futures in focus with a look at how new talk of tapering by year’s end is impacting gold prices in "On The Markets." They speak on Bloomberg Television's "In The Loop."

Fundamentally driven rally or something more technical?

Wednesday we had an $80 range, which is huge.

We rallied 4.5%. we sent retraced back down.

What does it tell me question mark short covering and not a lot of new buying interest coming into the market.

You also look at what etf's are doing with net holdings.

The data is backing it up.

Whether you look at etf holdings or commitment and trade reports in futures, you are not seeing the data that shows you that there is a lot of new buying.

At the same time, a bunch of banks downgrading their assessment of gold prices, from citigroup and morgan stanley.

Last week it was goldman sachs.

You've got to take a contrarian view.

What are they missing?

Goldman does not have a lot of friends.

Fundamentals and the sentiment and the technical picture all pointing lower.

Everyone is used to piling on, so to speak.

When they pile on and they point out that it is driven by fed tapering, what else factors into but that they are not taking note of enough?

I think the technical picture is, you have what you call an inside month.

We are still trading inside the range from august.

1425 on the upside, 1275 on the downside.

Given all the news, given the downgrades, given everything else going on, gold has not yet moved outside the previous month's range.

I think traders are still waiting for a move one way or the other to give them the next step.

Just like the $80 range, we are locked into this period where we don't break out.

What will be the breakout, a side of all the fed taper talk?

Some dollar weakness.

Dollar weakening -- the dollar has been going lower since wednesday and goal does not seem to care.

I think we have to have more dollar weakness.

Possibly some debt ceiling resolution or some type of disruption in the debt ceiling negotiations, or possibly something in the options market.

Good luck with any debt ceiling resolution.

That does it for "on the market ." we are back on the markets in 30 minutes.

In the meantime, "market makers" is next.

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This text has been automatically generated. It may not be 100% accurate.

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