Silver and Gold Topped Out?

...Since I wrote that, gold has tried to pierce $1010 and has failed so far. The candlestick chart below shows that gold is again reaching very overbought levels in the short term and has not had a significant correction since April.
Furthermore, the Commitments of Traders report released on Friday shows a very interesting development. The Commercial Traders’ short position increased by a near record 54,089 contracts in one week, resulting in a four year record net short position of 270,797 contracts. I understand that these positions may be offsetting long positions in other less transparent markets, but the Commercial’s short position is often a very good indicator near market tops and bottoms. When they are very short, there is a good chance a large correction is coming soon. If the offsetting long traders are forced to liquidate, it could precipitate another sharp drop in gold. Check out the chart below to see how extreme the short position has become. It may be a little hard to see the near vertical spike last week in the blue, red and green lines: (more)