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US 10 year bond yield falls - but stocks and metals pressured?

Commentaries & Views

Wednesday morning, I suggested that if silver couldn’t hold $23.80 (spot), lower prices would probably quickly follow; silver proceeded to drop intraday to a low of $23.25 spot. Thus far, it is holding with a short-term bottom about 10 cents higher than the Jan. 5 low of 23.11. I would reaffirm that if the Jan. 5 low breaks, traders should account for the probability of lower prices still, and $22.55 would be the level to watch, in my opinion.

Gold also made another run at the $1920 level yesterday before again being beaten back down. Let me reiterate that I believe metals likely have higher to go before spring (which is in line with classic seasonality for metals) and that should a deeper correction occur, my current forward-thinking strategy is that the dip is to be bought, again.

Interestingly, yesterday the US 10-year yield dropped precipitously, right in the face of Fed president Bullard who did his best to raise the prospects of a more aggressive hike path. If you read my analysis last week, you might have expected the yield to continue to drop. I wrote: "Another look at the US 10 YR yield (daily chart) shows that a lower low is still the probability. My bias is to be long metals (and strategic stocks) for as long as the pattern is in play and the yellow support zone is in reach".

Below is an update of that chart displaying the lower low on the same daily timeframe.

Although yesterday, stocks and metals did not respond favorably to the perception of diminished risk as a function of dropping rates - I think it is too early still to throw in the towel based on the speculation that Gold and Stocks are preemptively sniffing out a longer-term bottom in the 10 years and the DXY, for now.

Thanks and have a great day,

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