Spot price for gold is up close to 1%, but futures (red line) is up only half of that. Looks like the algos are desperate for cash and selling futures for less premium than usual.
I think we've all done it a time or two, especially when we were starting out trading, where we sold our winners to cover the margin call for the loser stocks only to watch the winner stock go up more and loser stocks tank. Well, that's what the algos are doing tonight, selling gold and pumping US index futures.
As a result, June gold futures isn't gaining any traction, it appears to be forming a huge pennant. The investment firms that run the algos must have a shitload of gold futures. The difference in spot price and Jun gold futures, that's how desperate the algos are, they're selling at below market value.
Anyways, GLD ETF carries actual physical gold, so I assume pricing will track spot price, not futures.
I think we've all done it a time or two, especially when we were starting out trading, where we sold our winners to cover the margin call for the loser stocks only to watch the winner stock go up more and loser stocks tank. Well, that's what the algos are doing tonight, selling gold and pumping US index futures.
As a result, June gold futures isn't gaining any traction, it appears to be forming a huge pennant. The investment firms that run the algos must have a shitload of gold futures. The difference in spot price and Jun gold futures, that's how desperate the algos are, they're selling at below market value.
Anyways, GLD ETF carries actual physical gold, so I assume pricing will track spot price, not futures.
Note
My apologies, I had to look this up, the difference in price between spot price and futures is called basis, so they're selling futures at a reduced basis than before the Trump speech. In any case, they're desperate for cash.Note
Kinda disappointed by the pump. I know gold doesn't usually move more than 1$ in a day, but that was a pretty big event. I guess all of the investment firms lost so much money they can't buy gold.Note
GOLD IS RED. Looks like firs took such a huge hit they had to sell of gold to cover losses and margin calls.The decrease in basis is bearish, and I guess I should have known that. Oh well. Too many forced sellers, and not enough buyers. Lesson learned, gold is not that great of a hedge for overnight play.
Note
Turns out the decrease in futures basis is because gold is exempt from tariffs, and tariffs were priced in.
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