Contributed Commentaries
US dollar at resistance: gold, silver, stocks, up
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Tuesday, I wrote, “My base case is that metals get flushed down between now and the end of the week as the ratio and DXY hit their resistance and sputter out. If gold were to hold $1885 as the ratio and dollar top, I would consider that a signal for a long trade in metals”. Yesterday, both gold and especially silver were once again aggressively lower in the pre-market, but bulls stepped in. Both metals paired a significant chunk of their losses intraday, and today, they are following through higher.
The gold to silver ratio reversed with the metals price, just as the ratio tagged resistance.
Silver bounced off of support and is following through higher with conviction as of this morning. Traders might pull the trigger on a tranche of a long position with a target for silver back at the top of the range, or higher following a breakout. The whipsaw reversal type action could make it hard for traders to pull the trigger; of course, without a crystal ball, the only choice is to pick a spot to enter and manage risk.
I’m not sure whether metals are ready to take off in a straight line, but the weight of evidence suggests the probability that at least a short-term low is in.
The DXY hit 105.4 and is cooling off.
Gold looks like the pennant it’s been forming is preparing for an upside breakout. The prudent course may be to wait for gold to prove the sector is on the move with said breakout before overweighting.
Thanks and good luck
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