Gold and silver deadcat bounce or reversal

New York (Oct 1)  There was a lot of excitement around gold and silver yesterday Thursday. Both had big rallies, which begs the question: Deadcat bounce or reversal? The answer for now is we don’t know, but we remain short. Based on the current price action, Thursday’s rally did nothing to improve the recent trend.

More than likely, Thursday’s rally was a short squeeze or deadcat bounce. There is no answer that would be 100%; we can only base decisions on price action. We expected a bounce, and we assume the selling will resume in a day or two. Gold must break above $1,770 based on December futures to even be considered and silver must get above $22.50 in December futures.

With the Bond vigilantes back and pushing interest rates higher, the metals should work lower. However, there is always the possibility that the markets have already priced this action in. The trend is lower and there is no reason to trade from the long side of the market. However, buying physical metals to hold and store is always a good idea.

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

KitcoNews