After a nice shakeout and pivot higher in mid-October, precious metals ran out of steam and gave way to a stronger US Dollar and continued appetite for US equities. And with the current pullback in precious metals on day ten, investors should make note that both Gold and Silver are nearing important support… support that, if broken, could lead to another plunge lower… and support that, if held, could keep short-term rally hopes alive.
That said, let’s look at some charts for perspective.
First, let’s look at the US Dollar vs Silver and Gold (and the S&P 500). It’s likely that precious metals traders will be keying on the Dollar due to its recent high correlation. Note that the charts below are EOD charts.
US Dollar vs S&P 500 vs Precious Metals – Daily Chart (October/November)
Continued US Dollar strength could apply further pressure to the precious metals sector. This makes the near-term support levels for Gold and Silver critically important (see charts below).
Looking at the Gold price chart below, it is apparent that the .618 Fibonacci retracement level around 1275 is important on a closing basis. As well, Gold bulls want to see the current uptrend hold. If it breaks, or is punctured, it would set the stage for a retest of the lows. Today is bar 9 of a daily Demark buy setup, so Gold has an opportunity to firm by mid-week. But, will that be enough to stop the bleeding?
Precious Metals – Gold Daily Price Chart (EOD)
Precious Metals – Gold Weekly Price Chart (EOD)
Looking at Silver, the $20.50 to $21.00 support zone is an important support zone. That said, Silver bulls would rather not see prices knock on the $20.50 level for the third time. As with Gold, it will be critically important to see how Silver reacts as it nears $21.00.
Precious Metals – Silver Daily Price Chart (EOD)
Trade safe, trade disciplined.
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.