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Equities And Gold Rally

Commentaries & Views

Equities had what’s known in the business as a rip-your-face-off rally Monday, exploding almost 500 points. The rally was no surprise; six ugly days in a row usually leads to a vicious short-covering rally. That’s exactly what we got -- a short squeeze in a market that has topped.

Gold also had a nice rally on Monday, not as powerful as equities but certainly based on the same short-covering set-up. After making highs at $1,365, gold has fallen on hard times and had been down nine out of the last 14 days. A short-covering rally was imminent and there it was Monday.

The rally in gold is continuing Tuesday while the equities are under a little pressure. The common thread here is volume, as both rallies are on declining volume. Indications are both have more room on the downside. We believe gold is a lot closer to a buyable bottom than equities. Look for support in gold at $1,300 and equities to have a much deeper sell-off.

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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