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Gold, silver and platinum reverse huge

Commentaries & Views

After being under heavy pressure for weeks, the metals have had a major reversal overnight. The reversal started on Friday when June gold traded as low as $1,460, platinum $589 and silver $12. At that point, all three made higher lows and started to rally.

Friday looked like a bounce in a market that still had room to the downside, and we were seeing a normal dead-cat bounce within a downtrend. On Monday, the rallies were a little bigger; however, with the late charge, our signals reversed to long. It’s looking like the metals are ready to take the next up leg.

We reversed to the long side this morning along with our algorithm, although this rally looks suspect. We don’t fight the signal but from a pure technical stand, the speed of to rally is too parabolic and fast. The bid and other spreads are wide, indicating more of a fear trade. For now, we are long gold, silver and platinum but uncomfortably so.

The next up leg may be here. We won’t fight our signals, but a pullback would be no surprise, which could create a better buy level. We follow the rules of our model exactly; we are now long with a small position. To confirm that this is the next leg up, there should be a pullback and consolidation. Otherwise, this could be a monster short squeeze. Time will tell.

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.