Gold futures started a recovery this week before running into stiff resistance at 1755-1760/oz, states Phillip Streible of Blue Line Futures.
That level coincides with the high from March at 1756. What led to the recovery in prices was the pause in rising yields, a new US dollar downturn, and increasing geopolitical tensions globally.
Unfortunately, the "pause" in rising yields is just that a "pause," and the upward trend should resume next week, therefore, weighing in on gold prices. We exited gold longs with many clients and will wait for sub-1690 prices before reentering as a value play for the third and fourth quarter.
Silver futures have been more constructive on the charts, but it is most likely to track lower next week until it can completely unhinge itself from gold, giving us another chance to add near $24/oz. Another additional headwind is from increasing mining operations that are underway with vaccine rollouts.
The expanded operations will lead to further supply and further paper selling because miners use paper to lock in prices. They execute their paper selling through large commercial banks; therefore, expect to see an uptick in short selling as the week presses on. We will be using a similar strategy to gold "buying the dips and selling the rips" while adding call options for any sudden price surge in the back half of the year. Don't get me wrong; silver has excellent long-term prospects.
Governments globally are working to fight carbon emissions, and the best way is to focus is on wind and solar energy. As solar technology continues to see boosts in wattage, the prospects for tighter silver supplies in the coming years remain. We are setting up for another opportunistic silver option play for early 2022.
A few other ideas we have been implementing have been short 10-year on this rally. Doing so will help hedge your long physical metals, while crude oil in the $58 range still looks like a value play this quarter. For copper, we have been adding call spreads for the upcoming infrastructure bill, and active platinum buying has taken place below 1195 while selling has been occurring above 1225.
Learn more about Phillip Streible at Blue Line Futures.
