"Interesting observation. Probably a trader working a very large order with weekly price adjustments. From what I observe there has been a large buyer or buyers on the gold bid for months. Sovereign? - Probably. Sovereigns leave large orders to be dealt at the London fix. Both buy orders and sell orders in many tonne's of gold.

"This trader will be spooked that his influence on the Gold market has been observed, so he will likely change his trading pattern to avoid any anticipation of the Tuesday factor he has created."

Eoin Treacy's view

My comment - Thank you for these informative additional comments to this interesting article from FT Alphaville covering what has been a remarkable movement in gold prices on Tuesday's since at least August. I agree there is something akin to the Heisenberg Uncertainty Principle to these movements in that the more people who know about them, the less likely the traders involved will be to repeat them. http://en.wikipedia.org/wiki/Uncertainty_principle

Regardless of the Tuesday factor, gold's uptrend has certainly picked up pace over the last week and it has become quite overextended relative to the 200-day MA. Today's pullback checks the advance and while it has key reversal characteristics the loss was pared towards the close meaning that additional follow through is essential to confirm the signal. When we compare today's action to previous peaks in the gold price, the dynamic is nowhere near big enough to mark a medium-term top with any certainty. Follow through tomorrow might confirm it but this could just as easily mark a pause in what has otherwise been an impressively consistent advance whose 10-week progression of higher reaction lows remains in place.

Silver has accelerated this week and is overextended relative to the 200-day MA. While today's action is a more classic key reversal characteristic the size of the dynamic is not particularly compelling compared to other silver peaks and the short-term progression of higher reaction lows remains intact.

Platinum and Palladium have had much less violent pullbacks and the NYSE Arca Goldbugs Index, while weak today, would need to sustain a move below 500 to question the 10-week progression of higher lows.

I mentioned in last night's Subscriber's Audio that medium-term peaks in gold have been confirmed by even bigger peaks in silver. There is a possibility that we are seeing such an eventuality now but as I said above additional follow through is required to check momentum beyond a brief pause. I also mentioned a piece David wrote on April 6th talking about $1350 as a possible ambition for the current move. Here is the relevant section:

However, if gold is to experience a further and similar-sized advance relative to the September 2005 and 2007 gains, which would take it to at least $1350 during this medium-term cycle within the secular bull market, it should do so soon, while seasonal factors remain favourable and before the next cycle of higher short-term interest rates is underway globally. There are no 'money back guarantees' in markets so I will trade these leveraged futures positions conservatively, behind trailing stops.

It is interesting that $1350 would have been considered a modest target earlier this week but was relatively ambitious in April. Gold has rallied impressively and this is probably not the best time to be putting new money into the market. For traders a stop would now be appropriate somewhere in the region of $1300 while for investors a sustained move well below the 200-day MA would be required to question medium-term upside potential.