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If gold is a hedge, why is it under pressure?

Commentaries & Views

As we approach the end of the year, gold, silver, and platinum have work to do on the downside. The dramatic drop last Friday, Monday and Tuesday did a lot of technical damage to the charts. Gold broke down from congestion and is now below $1,800 based on March futures.

The next support level for gold is $1,750; if that fails, $1,700 is in play. If you have watched markets for any period of time, everything is based on probability and the most money is made trading with the trend. The break from congestion was a possibility even though the trend at the time was higher.

Gold should find some support around here; the best action would be consolidation. A rally from here would be bearish and a selling opportunity. The steep drop could continue as well, but a bounce is a day or two away. That bounce should be sold, resistance is at $1810.

Platinum has started to bounce once again and should find resistance at $1,010. The rally came from a blow-off to the downside; $ 940 is the next major support level. Although it is a downtrend, silver looks the best and is now in a range between $23 – $24. All metals are in a downtrend, which gives you an opportunity to sell paper and buy physical

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

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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.