The HFT algos appear to be the only traders in the gold and silver market this week ahead of Bernanke’s Jackson Hole speech tomorrow, as both metals’ daily charts are nearly identical for the past 3 days.
Silver in particular appears to be firmly under the control of the HFT bots. Three consecutive days it has spiked precisely on the COMEX open, only to be smashed back to pre-COMEX open levels several hours later. As today’s chart thus far is perfectly super-imposed on Wednesdays, look for a sell-off back to the $30.70 area around 10am-11am EST, followed by a pop, and a gradual sell-off throughout the electronic afternoon access market trading. With the algos the only ones trading the metal currently there’s not much point in discussing technicals, but it is healthy that silver is consolidating most of the week near $31 after it’s big 12% gain last week.
Gold’s chart also can be super-imposed on Wednesday’s action, albeit from a $15 lower level thanks to yesterday’s $15 10am waterfall raid. The raid was unsuccessful in smashing gold below $1650, and the level has turned from resistance into support.
The main take-away is it appears uncertainty is prevailing currently, as few traders are willing to gamble on whether The Bernank will or won’t tomorrow- leaving the TBTF’s HFT bots to gun themselves for a few pennies while everyone else waits on the sidelines for Friday.
Again, as we would be majorly surprised at an official QE3 announcement tomorrow, be prepared to STACK THE SMACK at 10am EST Friday as Bernanke speaks.