Gold headed for a test of 2000
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Last week, gold and silver broke out above resistance and reversed to an uptrend. Both should test upper-end resistance as they tested support on the way down. We are long, but expect some selling pressure before breaking out to the upside.
Gold and silver are still in the consolidation pattern, which has tormented traders since the beginning of time. Eventually, they will break out and confirm a direction; until then, trading will continue to be challenging. History tells us they are going higher, but the short-term trends continue to change for traders.
The resistance levels to watch are: gold at $2000 and silver at $26.5. Once they can move and hold above, there is room for a much bigger rally. In the meantime, there is no volume and no real driving force behind a rally. Remember, markets never announce themselves, but when the next move begins, it will be big.
Precious metals should be owned on a physical basis with capital that is not needed tomorrow or anytime soon. Trading should be done with paper, knowing that we can trade either side without emotions.
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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