It was almost humorous today in the gold pits as the hedge fund that tries to act like the ESF got run over at the outset of FOMC Chairman Ben Bernanke’s first day of testimony at the semi-annual Humphrey-Hawkins Senate review of monetary policy.  Gold, which had been trading well north of $1590 per ounce fell on a wall of selling that was swatted away in moments by the bulls as the full weight of Bernanke’s admission that monetary policy was not going to be anything other than very accommodative for the foreseeable future.  If this hedge fund – or group thereof – weren’t complete crack addicts and sociopaths I would almost feel sorry for them as gold blasted back through $1600 and held serve above $1613 for the rest of the afternoon.

The same thing happened in Silver but the rise was not nearly as impressive with the white metal only rebounding to $29.40 per ounce before hitting the ‘wall of infinite selling.’  There are a lot of outstanding silver contracts looking to begin standing for delivery on Thursday.  At this point anything to keep that situation from worsening will be done to protect the COMEX.  I’ve heard rumors of cash settlement already taking place, but I don’t put any stock in that.

The situation for gold is very simple right now.  A close this week above $1620 per ounce would be a massive reversal signal on the weekly chart and bring in more momentum buying as well as short covering.  If the read on the COT report is correct about the structure of the market then there are very weak shorts sitting above these prices who will cover into any NY trading hour strength above $1620.   Silver has a harder slog ahead, needing to close above $30.20.  $1620 gold will not be enough to propel silver over $30 right now, a bigger move will be needed to light that fire.