Let's hope $258 holds. Concerning COTs, Steve Saville of speculative-investor.com in his weekly update said today,
"COTs very bullish for the US$," as the commercial traders are net-short Swiss Franc futures to the tune of 38,000 contracts, a number which corresponds with the March bottom in the dollar.
For gold he points out that "although the commercial traders now have a very large net-short position (around 98,000 contracts), most of the 'longs' in the market are the large speculators." Over the past 2 months the small traders have remained on the fence with a 29,000 contracts net-long position while the big traders have fought it out. As such, the situation is very different from the way it was at gold's February peak when the small traders were 'frothing at the mouth' bullish. If nothing else this means that a sharp decline is not likely at this time because the least well capitalized and most easily panicked group are not heavily long."
This Thursday, June 5th, the ECB decides whether to cut rates or not. There is speculation that they may cut by 0.5% which would take some pressure off the dollar. Of course if they don't cut, then the dollar would probably continue its drop. If $258 doesn't hold on a weekly basis, I will exit my trading position in gold stocks. |
