swissaustrian
Yellow Jacket
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During the last 2 1/2 days gold and silver bounced up from their long-term supports at 1526 / 26.6. They basicly retested their December 2011 lows with the precision of an assassin (thanks to algorithmic trading) on wednesday. Then the FED released their FOMC minutes and the QE rumor trading began. PMs were oversold anyway. A short squeeze started and took us to intraday highs of 1598 / 29.06 today. The miners experienced an even bigger short squeeze. Since about 2 hours, pm markets have recoupled with other asset classes and some are taking profits on their pm positions. The short squeeze could already be over. The question now is: what's next?
The dollar had a massive rally and might sell off for a few days. After that the dollar strength might continue for a while, putting pressure on pms in dollar terms. The other side of the coin is that speculators might return to pm markets, driving pms up on the renewed QE rumors. Phyical demand is also very strong, as demonstrated by the return of backwardation. This is the big joker and and the impact of that on spot prices is very difficult to quantify. My guess is that pms will stay relatively flat, maybe appreciate a bit (with significant volatility) in USD terms until mid-june (FOMC meeting), but will thereby outperform stocks and other commodities as the USD continues to appreciate against other fiats.
If the FOMC does enact some QE in june (or gives a clear hint), pms will rally and the USD will weaken somewhat, if not we might get another selloff.
Technically, it would be important to reach and hold 1600 / 30 in the medium term (2 weeks), ideally even reach 1630 / 31.5.
The dollar had a massive rally and might sell off for a few days. After that the dollar strength might continue for a while, putting pressure on pms in dollar terms. The other side of the coin is that speculators might return to pm markets, driving pms up on the renewed QE rumors. Phyical demand is also very strong, as demonstrated by the return of backwardation. This is the big joker and and the impact of that on spot prices is very difficult to quantify. My guess is that pms will stay relatively flat, maybe appreciate a bit (with significant volatility) in USD terms until mid-june (FOMC meeting), but will thereby outperform stocks and other commodities as the USD continues to appreciate against other fiats.
If the FOMC does enact some QE in june (or gives a clear hint), pms will rally and the USD will weaken somewhat, if not we might get another selloff.
Technically, it would be important to reach and hold 1600 / 30 in the medium term (2 weeks), ideally even reach 1630 / 31.5.