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Gold/Silver: time to get technical

Commentaries & Views

We just experienced one of the quieter weeks for Gold with all the distractions and headlines focusing on the "Delta Variant" and its potential negative impact on the reopening trade and Small Cap stocks. The Russell 2000 came under significant pressure along with Crude Oil on Monday and Tuesday, followed by a "V" shaped recovery that extend gains into the weekend. The significance is that volatility of specific asset classes will continue throughout the rest of the year due to the crowding of those risk asset exposures. Essentially everyone owns those same financial products, and when a new "Narrative" takes hold, everyone collectively runs for the door. Remember, the markets take the elevator up and the window down.

Cutting out the narrative this week and focusing on the technicals of one of our high conviction plays, we have been monitoring the constructive technical chart formation in the Gold market. If we do see a "risk-off" appetite in the equities, it could give Gold the spark it needs to punch a ticket through $1850/oz. To further help you understand the quantitative analyses of the precious metals markets, we created a free "Gold Trends Macro Book," updated with silver slides. You can request yours here: Free Gold Trends Macro Book.

Daily Technical Gold Chart

Gold continues to hold above key psychological support at $1800/oz while firmly above trendline support at $1775/oz. We are monitoring for another "Breakout" above the downward sloping channel near the $1825-1835/oz pocket resistance. If you are one of our clients or looking to become one of our clients and would like to position in Gold for the long run, we suggested considering using FOUR Micro 10 oz December Gold contracts per $25,000 and buying TWO at 1775 and TWO at 1685, with a stop at 1640. Doing such would ideally risk $3,600. We would look to a gold target of 2100/oz, which would allow for a profit of $14,800. If you would like to learn more about the strategies we are implementing or learn more about technical analysis, we created a guide to provide you with all the steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Precious Metals.

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.