GOLD and SILVER UPDATE (2:30 pm EDT)
In Monday's blog on the U.S. Dollar Index I wrote: "Short-term, however, there is support at 96, so we might see a brief bounce here which could coincide with a correction in gold and silver. If for some reason the dollar decides to really take off again, that could be very bearish for precious metals..." Well, the dollar is bouncing strongly and is pushing gold and silver prices lower. Gold is breaking below $1200 and silver below $16.50. Does this mean we should abandon our long positions in both metals? Not necessarily. There are still some short-term technical indicators that suggest a strong bounce in these metals from a bottom either today or tomorrow. We entered our long position in gold on March 18 so prices are still a considerable distance above our entry point. I am therefore going to hold this long position as long as gold stays above $1180. Silver is now breaking below our entry point from March 31 and is approaching my original suggested stop loss price of $16. I am going to maintain my long position here as well with a very tight stop loss at that price. The critical thing now is the dollar. If the dollar attempts another assault on the 100 mark and succeeds in breaking through this time, it would be bad news for the precious metals. Last week a bearish momentum signal turned the dollar chart's directional momentum from 100% bullish to mixed bullish and bearish. This would suggest more downside for the dollar, but, like the broad stock market, the dollar seems to have an unusual buoyancy these days so we don't want to underestimate its potential for a breakout. Holding my long positions in gold and silver with tight stop losses at $1180 for gold and $16 for silver.
In Monday's blog on the U.S. Dollar Index I wrote: "Short-term, however, there is support at 96, so we might see a brief bounce here which could coincide with a correction in gold and silver. If for some reason the dollar decides to really take off again, that could be very bearish for precious metals..." Well, the dollar is bouncing strongly and is pushing gold and silver prices lower. Gold is breaking below $1200 and silver below $16.50. Does this mean we should abandon our long positions in both metals? Not necessarily. There are still some short-term technical indicators that suggest a strong bounce in these metals from a bottom either today or tomorrow. We entered our long position in gold on March 18 so prices are still a considerable distance above our entry point. I am therefore going to hold this long position as long as gold stays above $1180. Silver is now breaking below our entry point from March 31 and is approaching my original suggested stop loss price of $16. I am going to maintain my long position here as well with a very tight stop loss at that price. The critical thing now is the dollar. If the dollar attempts another assault on the 100 mark and succeeds in breaking through this time, it would be bad news for the precious metals. Last week a bearish momentum signal turned the dollar chart's directional momentum from 100% bullish to mixed bullish and bearish. This would suggest more downside for the dollar, but, like the broad stock market, the dollar seems to have an unusual buoyancy these days so we don't want to underestimate its potential for a breakout. Holding my long positions in gold and silver with tight stop losses at $1180 for gold and $16 for silver.
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