Dips in precious metals prices may continue to be shallow
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday we suggested that traders stay nimble as pullbacks were at risk of remaining shallow. We also suggested that should jobs come in stronger than expected this morning, a pullback would be highly unsurprising.
As I type, both of those scenarios have/are in the process of playing out in gold; silver has already printed a new weekly high after this morning’s sell-off. Below is the daily gold chart showing the reversal in progress. Bulls should be ready to catch the next leg up to what this trader has already suggested will likely be $1,850, with some bumps along the way. If gold can close the week over $1,795 or better, $1,800, short positions could be in a lot more trouble, a lot quicker.
For anyone who has been keeping up, you have seen the below chart ad nauseum over the last few months. It is the weekly DXY chart. Note how important a signal of a long-term negative divergence between price and momentum can be. It’s playing out per textbook in the DXY right now. Also note how momentum began diverging from price as early as May of this year, with the index priced in the 104’s, just where we sit today.
This trader continues to believe that RSI will have to reach oversold conditions on the DXY weekly chart. Support, however, should be expected in the yellow highlighted area we have also been showing for months (also where the divergence occurred, not coincidentally).
Thanks and have a great weekend.