Gold Stuck in the Mud

Gold and Silver Market Insights

It took the United States Mint till the end of April 2018 to sell all remaining 2017 one ounce Gold eagles. And it took a so-called auction to move the coins. The auction did have a reserve premium on each one ounce coin. The U.S. Mint did not release the details on what premiums were paid by some AP’s on the back-dated coins.

The price of Gold remains stuck in the mud with many Wall Street traders (still long from $1,285) and still feeling pretty confident that there is nothing out there right now that would put pressure on the price of the yellow metal.

Using Algorithms Tied to the Dollar to Trade Gold

Since our markets have been range bound (for the most part), I wanted to talk about how Gold traders use algorithms tied to the dollar index to trade gold.

Professional Gold traders along with programmers work diligently to prepare a strategy in entering and exiting the gold market. Currently most use the U.S dollar index to trade in the Gold market. There is a strong inverse correlation between the US dollar index and the price of gold.

If the U.S dollar index hits a critical resistance level in the market ( as seen in the technical charts) then it means there is strong chance of downfall in the USD index. At that time the professional traders look at the price of gold. If the price of gold is at or near a critical support level then it’s a trading opportunity for the professional gold traders to enter into the market.

Wall Street Gold traders historically prefer to play the Gold market from the long side (buy first, then sell out later) than play the market from the short side (sell first, then buy back later).

With the absence of fundamentals like supply and demand in the market, professional gold traders use charts and algorithms to trade the yellow metal. Programmers do very well assisting these traders and at the end of the year if everything works out well. are compensated nicely.

All these algorithm programs are specifically tied to the traders trading strategy and vary from firm to firm. Some firms will incorporate specific news events to add to the charting strategy. If any of these programs are triggered strong moves can be seen in the price of the gold.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.