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Is Gold and Silver turning back up?


Mercury

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Just as with Oil I see a potential rally on precious metals and quite possible the end of a simple retrace and resumption of the longer term rally.  On Gold there are 2 scenarios if a rally is confirmed:

  1. If the 10 July high was the end of the first rally phase then we get an A-B-C from here with the current bottom being the A and a major trend retrace down to 1250ish (TBD)
  2. If 10 July was NOT the end of the first rally wave then another leg up higher is indicated (see Silver chart below)

The current price action suggests a Triangle retrace has been broken and if confirmed then we should see a rally away (FOMC might either fuel this or cause a retest of the break).  I cannot see the Fed raising rates and any hawkish noise is likely to be ignored.  No rate rise is good for Gold (and ironically also for stocks...).  Can't see the Fed raising rates while others are seeking to lower them and devalue vs the USD so a rally in Gold and Silver is supported by Fundamentals, unless the Fed dumps the coolade in the river...

 

The bigger picture on Gold is unclear in the medium term, although I do expect a retrace further down that this before the next large wave of the rally begins.  Looking at Silver to get an alternative perspective I think the wave 1 (Purple) is not yet done and expect it to top out in the 2200 region before a significant retrace.  If this happens on Silver it is likely to happen on Gold too.

 

I must confess this one I anticipated and am, already long Gold and Silver but once confirmed buy the pullbacks would seem to be the way forward and after that let's see where it tops out...

 



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In this case the impatience has paid off  but usually it doesn't I find.  As I also admitted I too did not wait for a confirmed break above credible resistance zone.  This is ok if you probe and keep stops close at good support levels.

 

However I am interested in what you mean by do well over the next few months?  My analysis suggests this rally will be relatively short term (especially if you use Silver as a guide) before a stronger retrace back down and then a major long term rally will be on the cards.  That rally would likely last a year or more whereas the current rally is likely to last only weeks so I am intrigued as to your thinking on how this current move lasts several months.  

 

Of course I could be wrong, if you shift everything to the left on my analysis we could have entered a strong rally phase on Gold on 30 May but again this would be a year long rally or longer.  Can you share your thinking for discussion purposes? 

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I think $1300 was a key resistance level. Its now equally important that level holds. I think its a buy at these levels with a stop somewhere below $1300. Maybe it will run to $1500 or $1550. I started buying it at $1260 and thought i might have got it wrong until brexit saved me. I have been surprised how resilient it has been post brexit and i think it will keep going up now. 

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