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Contributed Commentaries

Gold: Knee jerk move lower reversing

Jonathan Da Silva

Kitco Commentaries | Opinions, Ideas and Markets Talk

Featuring views and opinions written by market professionals, not staff journalists.

Commentaries & Views

We have repeatedly discussed the importance of traders being skeptical of a knee-jerk move out of a coil, on a catalyst. Today proved to be no exception in gold, as the metal was hammered to a low of $1,707 spot on the CPI print, before quickly reversing to just about unchanged on the day as of this writing.

The 5-minute chart below illustrates the knee-jerk breakdown and reversal:

Silver did not print a lower low this morning, unlike gold. A sign that the GSR may be in the process of topping, as we had discussed in yesterday’s piece. As also discussed yesterday, this trader continues to believe that the risk in long positions decreases as sentiment hits rock bottom, price becomes stretched below moving averages, and major support levels come into play.

The metals may stay pressured as the market begins to price in expectations for what could be a full percentage point interest hike at the next FOMC meeting. However, metals bulls continue to absorb significant selling pressure in stride, which should bode very well for the medium term.

Thanks and have a great day.

By Jonathan Da Silva

Contributing to kitco.com

Contact jdasilva@kitco.com
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.