Before Thursday’s rise in bullion prices, precious metals were in corrective mode this week after recent rises.
There were two big stand-out sales of gold contracts on Monday, estimated to be about 5,000 contracts at the European opening, and 15,000 on the US opening. The combination of the two sales drove gold down over $30, and on Tuesday a further sale of 15,000 contracts drove the price down to a low of $1293 for a total fall of $45.
This negative action occurred at the same time as a new banking crisis was developing in Portugal, with Banco Espirito Santo getting into financial difficulties. For many gold traders, this suggested these large sales were price intervention to maintain confidence in the financial system. For this to be true, Open Interest would have expanded on Comex reflecting new opening bear positions.
As the chart below clearly shows this cannot have been the case.