Blog

Gold is still clinging to the uninspiring support area in the 1670s. As it stands now, the ‘handle’ consolidation/correction that I’d originally projected in 2020 has long since given way to a double top, technically. The double top’s implications could be all the way down to the 1200s or 1300s, per a previous update. That’s just a measurement of a pattern. But it is a factor, so we factor it.

If gold holds here, supported by its sentiment profile and a slow shift toward a counter-cycle, the immediate upside target would be 1750, where there is stern resistance. But we are looking for more than a contrarian bounce. There is the chance that the FOMC itself could be a major contrary bullish marker that we’ll remember for a long time to come. But it’s not in the technicals. That’s a point I’ve been trying to make lately; if a contrary play comes about in the short-term, it’s not coming from the charts.

If gold were to lose this support and dive bomb to the low/mid 1500s it would be time to be paying much attention. Remember that precious metals corrections often (not always) end with a climactic downside event and reversal.

Silver continues to be of interest because of the smash job it did into a thick support zone. Think about it. How many silver bugs thought they’d endure prices in the teens again when they were running the idiotic #silversqueeze promotion at $30/oz? Answer: none. Weekly RSI and MACD have a sneaky positive look to my eye.

Silver/Gold Ratio, meanwhile, continues to be aloft and if we clear this week in that condition the near-term prospects could be good for the precious metals complex. Again, while I am a gold purist so to speak, silver often leads the sector because those silver bugs are vigorous speculators whether they know/admit it or not.

It has been my view that the SGR is trying to mount a contrarian play in the face of FOMC. This morning that is still the case as it ticks a new high. But who knows how the machines will react to today’s news? If the week closes in this condition it would be more support for the contrarian relief scenario in precious metals, but also possibly in other areas of the markets.

Silver has more cyclical aspects to it than gold as it is really a commodity that is gender fluid as a precious metal too. If it does continue to rally, the time for caution (as well as monitoring for a bigger bull move) would be if it hits resistance as noted in red. Being the product of two markets with support/resistance and because this chart is formed by previous market behavior, I believe that support or resistance in a ratio are valid as well.