05 May 2010

Gold : Problem Child & Other Thoughts

  • Narrowly missed selling GCM0 last night. Limit sell order at 1193. High traded 1192.8! Frustrating (now 1168).
  • Markets in risk aversion mode. Plenty to worry about : Greece/EU contagion, GS witch-hunt, Australia Henry Tax, China tightening, US financial bill to limit future bailouts, UK elections tomorrow.
  • Price action last night reflects panic exit from risk trades eg S&P -2.4%, Copper -3.5%, EUR/JPY -1.5%, USDX +1.4%, US10YY -9 bp.
  • What is puzzling me is price action in Gold. Recently, it has been EUR down = Gold up, but last night was more like back to the old USD up = Gold down. This change is causing some damage to my P&L. Suspect this is due to raising of cash for margin calls.
  • As might be expected, hurt by USD/CAD and Bunds move, made up for by short EUR vs USD+GBP and short S&P. 
  • The other major positions in ED Spread and USD/JPY little changed (on the day). Sugar is doing OK but tiny position. 
  • So problem child = Gold. Dropped P&L last night can be wholly attributed to its unexpected behavior.
  • Gold Charts : Still looking positive. Some signs of cracks on daily. Watching with care.
  • Do not agree with wholesale blind liquidation of Risk trades by markets. Think that when the dust settles, AUD (and CAD if I weren't so long already) would be a good long term buys.
  • The other interesting observation : This EUR/JPY downmove purely driven by EUR/USD component ie constant USD/JPY. Seem to suggest selling JPY is good trade because if JPY cannot rally in face of risk aversion, then surely it must weaken when risk taking comes back.

1 comment:

Taichiseal said...

Took some profits on short EUR/USD and S&P this morning at 1.2952 and 1170.