This morning I recorded an interview with Al Korelin for his weekend show which should be up Saturday US time. Al talked about how bad the sentiment was in the gold market right now, the worst he has ever seen, and I'd have to agree.
Having said that, I talked about the recent return of demand for gold kilobars from Asia. Premiums have come up off the floor and are moving up nicely. This caused me to have a look at the kilobar movements in COMEX warehouses (see here for background on this indicator), which are shown in the chart below
What it shows is that deposits seem to line up with future price weakness, as bullion banks stockpile them when Asian demand is weak. The withdrawals of kilobars, certainly in January this year, foretold price strength but it is not as strong an indicator considering the late 2012/early 2013 ones. You can see that on the 2nd of September 5 tonnes came out of JP Morgan's warehouse and that doesn't surprise me considering the renewed interest we are seeing. Worth keeping an eye on the COMEX movements to see if more of the 26 tonnes that was deposited in August is pulled out.
On the chart you'll notice a buy and sell point marked. These were my previous calls, which I discussed here. In the Korelin interview I did call a bottom, so you might want to trade against that :P
The uptick in kilobar premiums and COMEX movements gives me a bit of confidence, but on the negative side I don't see any positive narrative developing around gold that would drive big fund money (as Dan Norcini notes, "the big leveraged macro trade buying indiscriminately across the entirety of the commodity sector is not in the cards for now"). Goldman is still out there pushing their $1050 call and they don't want to be proven wrong. All that chatter does impact on the professional market.
However I'm confident that gold won't go below $1180 as I think Asians see this bottom of the range we've been in since April 2013 as a good buying point and that will provide support.