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Chair Powell Re-nominated, gold takes a dive

Commentaries & Views

Monday, President Biden's nomination of Fed Chair Powell sent gold into a nosedive and reversed our long trading position to short today. The selling was sharp, fast, and constant. Silver and platinum were weak as well, but they haven't suffered reversals yet.

Silver and platinum are under pressure this morning and would reverse tomorrow if the pressure on metals continues. Gold, silver and platinum were the first to react to the announcement and started selling hours ahead. Indicating they knew that Powell was going to remain the Chair of the U.S. central bank.

The meaning of the appointment is the best result for the economy and was a slap at the progressives who were fighting for Lael Brainard. However, it was not good news initially for metals and interest rates were starting to rise. The chain reaction of events triggered a sell-off in equities and bond markets.

Although Monday's sell-off was painful and puts our trading position short, we are still big fans and owners of physical metals. Gold, silver and platinum will resume a move up after this short-term sell-off concludes whenever that is. This is where our investment in physical metals and trading of futures are on the opposite side. The good news, we can benefit now on the short side and later on our long physical holdings.

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

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.