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Gold Bulls Getting Nervous

Commentaries & Views

On Monday, gold whopped around between positive and negative territory, closing the day slightly lower. Gold is now down for the third day in a row after the spike rally that took it to $1,454 and new six-year highs. Is the rally over?

We would look at this as just another buying opportunity. Looking back at the rally, we have seen this pattern repeat after each move to new recent highs. Gold moves higher, profit takers come in, and the weak momentum players get nervous and sell out. This action creates a small sell-off, which usually turns out to be just another buying opportunity.

This time doesn’t look different. The weak hands are getting out because they expect the rally to go forever. As soon as the selling ends, which should be $1,400-$1,410, we look for the buyers to step back in and take gold to the $1,500 level. Until further notice, gold goes higher

Silver is now consolidating at new yearly highs and shows no signs of slowing down. The pattern itself suggests that silver has a lot of room on the upside and this congestion pattern should resolve in another breakout to the upside.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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