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Capitulation around the corner?

Commentaries & Views

With gold's severe reversal of $1,900 early yesterday morning, it looked like a close below was imminent by 10.30 am. No surprise that gold has come down further to tag the $1875 level. Silver is finding support at the round number of $23 this morning. Platinum seems to continue building a base, and a move to $965 is looking increasingly probable.

With the FOMC just around the corner, traders should continue to expect volatility. USD strength has been dominant, and the rate hike may act as a "sell the news" event, relieving some of the pressure currently on metals and equities.

Gold is now vulnerable to a drop to $1850 on a capitulation, knee-jerk sell-off. For equities, the same type of action may play out with an undercut of the April 26 low on the S&P 500 (which has so far held up). We can’t know for sure whether capitulation will occur. Still, traders will want to be mentally prepared to take advantage of a buying opportunity and/or to avoid emotional decision-making.

Thanks and have a great day,

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.