Gold Tough in Face of Yellen 'Fed Propping' = $1320 in 6 Months

Gold

Stocks Propped, Gold Holds, As Yellen Rehearses

Janet Yellen's speech at 12:50 p.m. on workforce development. Her colleagues at the central bank -- Esther George, Robert Kaplan and Jerome Powell -- are all also due to speak later.

So Far Today:

Conference Board: "Consumer confidence increased sharply in March to its highest level since December 2000"
Consumer Confidence CB March 125.6, Exp. 114.0, Last 114.8
U.S. HOUSE REPUBLICANS DISCUSSING POSSIBLE WAYS TO REVIVE OBAMACARE REPEAL, REPLACE LEGISLATION -LAWMAKERS
Case Shiller Jan. 20-City Composite: +0.9%, Exp. 0.7%; Y/Y 5.7%; Exp. 5.60%, Last 5.50%- meaning house prices accelerating despite Mtg rate hikes.
Goldman keeps Q1 GDP est. at 1.8% after advance trade balance and wholesale inventory data
Stocks are higher on the week at time of this writing- raising rates is more likely, how fortuitous

Stocks Propped?

The Market's Invisible Hand is Very Busy Today Pre Yellen

The JPY seems to have the same buyer as the S&P. In between the 3rd and 4th green rectangle the stock short sellers just throw in the towel while the JPY dives. Who has the temerity to short stocks these days when the Plunge Protection Team needs higher prices so they can justify raising rates?

h/t @zerohedge

Gold Holds

Gold is doing what it should now. Rally on overnight Brexit safe haven, momo specs looking for quick buck. Breaks channel and sells off on stronger stocks. Stronger stocks means rate hike will happen. Last t rate hike Gold rallied. Moral of story: Fed monetary policy cannot alter secular trends. it can only slow or speed them up. It just doesn't matter. Houses are rising even in increasing rate environment. Inflation is here. Gold is a buy. it may look uncertain, but it is respecting technicals faster and more violently than in past. It is becoming a real market. This is why we said yesterday, $1320 is in the works.

Gold Today

1- Chair Yellen speaking at about 1 pm

The Fed on March 15 raised its target for the benchmark federal funds rate by a quarter point to 0.75 percent to 1 percent and released quarterly forecasts showing that officials expect to hike twice more this year, according to their median estimate.

Janet Yellen's speech at 12:50 p.m. on workforce development. Her colleagues at the central bank -- Esther George, Robert Kaplan and Jerome Powell -- are all also due to speak later. Economic data releases noted above in Appetizers

2- Option Expiration Tonight on Comex

Via George Gero, MD RBC Wealth Management

Open interest near highs in futures 474,934
option open interest 1,161,966- expect big open interest loss in options tonight as 200K likely go out worthless
All showing the bullish higher open interest, higher volume, higher moving averages signs.
Silver at about the same 198433 adding some and now at 18.00 area.

Calls> Futures> Margin Calls = Selling

Expiring ITM options are mostly calls which upon exercise will likely be sold in the market to avoid margin costs. Note how the market absorbs this selling. When a market has topped, the option related selling snowballs

Yellen + Option Expiration = Possible Snowball Selling

Option Longs Take Profits

Options Expire: ITM calls become futures and are sold for profits
April Futures First Notice Next: Speculative Funds decide between rolling their positions to June vs liquidating of position
Fund Catalyst: If mkt sells off, then funds "on the fence" may just throw in towel and add fuel to sell-off
Banks and Prop desks sell for clients and for themselves to ride the sell-off momentum

Yellen Effect

Add to all this the plethora of Fed speakers today and Yellen on top? You have a recipe for short term volatility lower. If there is buying underneath as we feel, it will be a short lived sell-off. If there is not, just wait until there is blood in the streets in the form of lower OI. How to know the difference? That is where capital at risk, and technical analysis come in. If you are nto trading events, then sit back and watch people trip over themselves and be thankful.