Written by The Gold Enthusiast (https://thegoldenthusiast.com/)

Your friendly Gold Enthusiast here, jumping in to give you a quick heads-up. There are two important short-term factors for gold prices over the next few days you’ll want to keep an eye on.

The first is a potential short-covering rally. As you know, a lot of traders went short on gold over the past 2-3 months. If we’ve seen the bottom for gold, all those shorts need to unwind. Some we let go last week but there are still a lot out there. The pop in gold on Oct. 11 showed a fair amount of volume in most gold-related vehicles, like GLD shown below.

GE-2018-10-19-GLD-3mo

You can clearly see the big spike in volume on the 11th. But did it take enough shorts off the table to prevent a short squeeze? Only time will tell.

Second: The US Dollar is gaining strength. And as we know, the fundamental relationship between gold and the Dollar means that will put a lot of downward pressure on gold prices in the US. Overseas demand isn’t seen as enough right now to override the gold-Dollar relationship. So if the Dollar does head up that means down for gold.

Which of these forces will prevail? Only the Shadow knows, and as usual, he ain’t talking. We’ll be keeping a close eye on it though…

Signed,

The Gold Enthusiast

DISCLAIMER: The author has no position in any mentioned security, nor plans to enter any such positions in the next 48 hours. The author is long NUGT and JNUG, and may trade those if conditions appear advantageous. These are very small, non-market-moving sized positions.