The failing crowded trades continue to implode. The saga from last year still haunts investors.

Latest casualty is gold. The shiny metal traded perfectly inside the trend channel until the recent break down. We warned about gold bulls having got ahead of themselves recently and warned that the 1350 ish area was huge resistance.

Since then, gold has sold off rather violently. The trend channel is broken and gold trades below the 50-day average for the first time since late November, taking out a month’s gains in a few sessions. This price action is not overly bullish.

The below chart shows the net non-commercial positioning in Gold. Unfortunately, this is a chart that is delayed, but it paints a clear picture. The crowd was short at lows, and has been accumulating recent net longs just as gold topped out.

We also warned about the gold miners’ space sudden huge move higher. The ETF, GDX US, has since then sold off aggressively. Note this ETF is down to the lower part of the channel, as well as the 50-day average, after falling almost 10% in a few sessions.

As we have been outlining, there is no “sudden” inflation, so the move in gold was very much just another narrative for investors to trade. One of the main logics behind our long gold argument during the autumn, was the fact gold was a “cheap” hedge on fear. Over past weeks, our logic reversed since fear has imploded. Our conclusion to NOT buy gold since the fear factor in markets has gone away, at least for the short term. First stop on the chart is 1280 and then the bigger support at 1250.

Source, charts by Bloomberg