Since last week’s crash I’ve been saying that if the gold market was going to turn around it would be a tough slog higher;  in a three steps forward two steps back pattern.  This behavior has been in evidence since yesterday morning where Gold hit a high above $1435 and since then has been settling lower and lower until this afternoon after pushing just below $1405 for a moment.   Currently, the yellow metal is hitting some resistance at $1415.  But, clearly the bulls are not in charge of the gold market for while the price has been volatile intraday, it has been pushing steadily higher with each successive re-test of previous lows providing a springboard due to uncovering a new supply of buyers.

Closing above Monday’s high on Friday will be a strong signal that this crash was artificially induced rather than fundamentally-driven.  While I’m sure there was liquidation of some longs in this move lower, the number of buyers that this has uncovered has put the market into a serious supply strain which will not be alleviated anytime soon.

Silver, on the other hand, is still languishing with the commodity complex and may very well stay that way until after the first of the month.  The open interest for May delivery is simply too high to be tolerated and the longer the price stays below $25 the more likely a significant portion will be rolled out in time before the month ends.  Options on futures expired yesterday and tomorrow is the expiration date for the futures contract.  This is the main reason why Silver has not bounced the way gold has — May is a delivery month for Silver.