Metals back in the box
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The action in markets yesterday was reminiscent of that last seen in the overnight hours of Nov. 9, 2016. Fear sentiment took stocks to limit down and drove gold up 100$ overnight, only to completely reverse by market open. Seasoned traders recall that knee-jerk, fear-based moves are always exposed to dramatic reversals.
Metals are back in the box they traded in earlier in the week, after $1960 and $1915 both fell under indiscriminate selling yesterday intraday. However, the recent pattern of higher highs in metals remains intact. $1875 and $1915 should continue to serve as price parameters for further consolidation. The pattern of higher highs also remains intact for silver, platinum and palladium as well. Platinum bulls, however, will be in a battle to reclaim $1065.
The opposite side of the reversal occurred in stocks, which started the day deep in the red yesterday only to close green. Stock futures are pointing to a slightly higher open today. The reversal was largely fueled by short position covering with bulls possibly closing hedges and certainly, bears taking profit on short positions. Whether yesterday's reversal signaled the bottom in this equities correction remains to be seen, as market participants' focus gradually shifts back to monetary policy and the "fight" against inflation.