Gold pares gains on the day as the volatility spikes continue at the highs | investingLive

As mentioned earlier in the week, these kind of volatility spikes are going to be commonplace as gold (and silver) continue to scale higher over the past two months. The unrelenting run is still yet to be met with a real pause or stop/reversal, and that’s reason enough to expect price action to hit air pockets from time to time amid profit-taking activity.

Gold was up as much as 0.8% on the day to $4,241 earlier but has now pared gains in a fall back to $4,204 in quick fashion:

At the same time, silver has also dipped back from $53.00 to a low of $52.50 and is holding around $52.70 levels now – down 0.7% on the day.

In the bigger picture, these volatility spikes aren’t anything too noteworthy as they are yet to form a larger reversal trend. But as we continue to keep at the highs, don’t expect conditions to be smooth sailing especially when there’s such a heavy consensus in wanting price to keep moving higher.

As the old adage tends to go, consensus trades can be one of the most dangerous ones. A tip from many years ago:

“Nothing in the market ever moves in a straight line forever. And when positioning becomes too crowded and overstretched, there is scope for a correction and profit-taking – especially if these are helped by short-term changes to the market narrative, thus prompting an exacerbated reaction in response. Or for quite simply the simplest of factors i.e. a trade goes too far, too fast.”