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Like Magic, Gold Reverses

Commentaries & Views

Editor's Note: Gold and silver has been, at best, a frustrating trade. Exclusive to Kitco News, expert trader, Todd "Bubba" Horwitz, chief market strategist and founder of 'Bubba Trading provides a strategy investors can use in a range-bound gold price environment. Sign up before March 10 for the Kitco News Weekly Rundown newsletter to receive Horwitz's exclusive report and trading strategy.

The invisible hand of the markets showed once again why we call them “they.” We have all heard the expression -- they pushed the markets, they are buying -- and Thursday at about 12:25 p.m. EST when gold hit $1,303, they decided that was low enough and gold took off from our level of support and rallied $20 from the bottom.

It was like magic. There was no announcement. They just decided to buy and buy like crazy. The rally was short quick and powerful, causing a short squeeze, also attracting some new money. This is a common event, especially when they get too big on one side of the market or the other and the market goes ballistic -- in Thursday’s case up.

The rally was not more than a short-squeeze, dead-cat bounce from oversold conditions. Our lower target was hit, but the sharp rally indicates there is more room on the downside and the market may now break through $1,300 on the downside. Sharp moves like that usually fail and suggest the bottom is not in yet.

Keep those stops tight.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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