Loading ...4-27–BALLINGER ON G&S
In the meantime, the US dollar index took a run this morning at the 200-dma sitting around 91.98 then abruptly turned on a dime and gave up all of the gains of the overnight session as of 3:00 p.m. on Friday afternoon, is down on the day. As I commented on the other day, the machines are having their way with gold and silver prices by responding and reacting to every tick in the U.S. dollar index. Since the Euro has such a large weighting in the DXY, it has been said that the Euro is dictating price to the PM’s more than the Asian currencies or the pound. I will continue to view the 200-dma as the line in the sand for my option positions and after today’s reversal, I am probably going to buy back a few SLV June $15 calls for $.75 because with SLV at $15.57, paying only an $.18 premium is a decent entry and pumps up the leverage when gold finally punches out through $1,375. I have a hunch that with the dollar’s RSI and MACD readings stretched this week, today might have been the turn for the metals because the algo’s are taking gold up ($7.50) and silver has just eliminated what was a 9-cent drop earlier. In terms of seasonality, the first half of May is usually better than the latter half so that may be the window for the breakout in gold.
The COT report is out and lo and behold, it was the Large Speculators that got squeezed last week with the pop to $17.25. That hugely-bullish short position has now been unwound so the edge we enjoyed three weeks ago at $16.20 is now lessened. It’s not gone completely but I’ll have to depend more on the reversal in the USD as the driver for the silver trade over the near term.