Overnight, higher bond prices and a weaker Dollar Index have caused holders of short positions to head for the exits. If you look at the time and sales volumes during the gold rally today, as soon as we broke thru the $1,304 level of resistance volumes picked up and the short covering rally accelerated.
On Monday, U.S. Retail Sales in January came in slightly better than expected, but the December revisions kind of surprised everyone and were adjusted. Initially retail sales came in minus 1.2 percent in December then were adjusted down to minus 1.6 percent.
So, now if you look at February’s 20,000 job creation number, the question comes to mind, is something developing? Are these figures a start of a slowing U.S. economy?
Does the Fed Chair’s comment, “we are at neutral at raising rates,” beg the question that he knows or suspects something is developing that he’s not sharing?
Some Gold investors have read into this news as a buying opportunity.
We all knew the gold market was very short below the $1,300 level. So, when the Dollar index started to retreat to lower levels and Bond prices rallied, it became evident to some Wall Street traders sitting with a short position, now might be the time to cover.
Everyone I spoke with this morning said they covered their positions. Many traders were expecting the market to stay below the $1,300 level. But the traders I spoke with are not too disappointed as they were short from the $1,318 level anyway. They all made money but did not make the killing they hoped for.
One trader told me he was awakened early this morning when the alarms were blaring on his algorithm computer program telling him it just executed his stop loss instructions and covered his short position. I told him don t complain, in the old days you would be hoping for a phone call in the middle of the night with a fair “fill” as they call it. Today it’s a whole different ballgame.
We will see how the day the day develops.
Have a wonderful Wednesday.
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.