Gold/silver/commodities: is this breakout for real?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Is this the breakout we have been looking for, and what confirms a breakout? Those have been the two most asked questions this week from clients.
Daily S&P 500
Out of the 40 commodities that we actively track and trade, only a handful finished the week lower. Two big standouts were the Dollar slipping .65% and the Vix falling 5.5%. That tells me two things, first, any hard asset should be rising in value, and secondly, the level of complacency in the equity markets is beginning to make me nervous. The rising geopolitical tensions between multiple countries justify looking at inexpensive put options on U.S. equities for the latter half of the year. Isn't the old saying "buy insurance when you don't need it, not when you have to have it." In addition to rising geopolitics, we recognize that the second half will have challenges on the economic data matching the unprecedented trajectory since the reopening. If you would like to be up to date on the developments of our specific strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up.
Gold and Silver are extending their run and have received an adrenaline shot on a Reuters report (confirmed by other sources) that China will now allow domestic international banks to import large amounts of Gold. China is the world's number one consumer of Gold, but the PBOC only allows just enough to meet the demand to be imported. Amid a steadfast recovery, demand is surging, and China is raising its quota to the most significant level since 2019. These are the much-needed tailwinds the metals markets were needing.
Daily Gold Chart
The technicals make it is easy to get excited about the rip higher this week; however, one must monitor our rare major four-star resistance. Do not forget that Gold is in an intermediate-term downtrend, although a long-term uptrend. Now that is a confusing statement. Silver is also approaching its 50-day moving average, where you want to capitalize and reduce your position if you are overweighted. From here, we would expect some consolidation or "backing and filling." Our "Bull/Bear line" comes in at 1765 for Gold and 25.95 for Silver; above here, the bulls are in the driver's seat in the near term. We created a guide that will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the Gold market. You can request yours here: 5-Step Technical Analysis Guide to Gold.