Contributed Commentaries
Like Magic, Gold Reverses
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
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.
