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Metals : Volatility & sentiment signaling the bottom?

Commentaries & Views

Wednesday, I wrote that I expected volatility to last into the end of the week and the precious metals are delivering. I wrote that I wanted to see gold close the week over $1855 as a high probability indicator that the upward trend has resumed. As of this writing, bulls would do well to recapture the $1832 level today.

On a more positive note: Sentiment in metals (which I eluded to last week) seems as negative today as it was positive when I cautioned longs at $1925; the price went up another $25 then. Likewise, perhaps the price has slightly lower to go now – but as a contrarian trader, with sentiment negative and the daily charts looking as they are (shown below), I would consider a rally imminent.

$1785 gold should offer solid support:

Along with $20.80 for silver:

The US 10YR yield and DXY both present as a mirror image of stocks and metals regarding stochastic RSI, and the DXY price action looks identical to gold.

What piques my interest is how the 10YR yield is poking above its December 2022 high, whereas stocks are well above their corresponding December low. Stocks “adapting” (by whatever means) to a higher interest rate environment is another check in the renewed stock bull column.

But is this actually the market adapting, signaling a soft landing? The key will be whether stocks can hold the bull market breakout and/or the October 2022 low, should upcoming economic data releases force the market to reprice a terminal rate.

My opinion remains that stocks can at least stay supported (opportunity in dividend-paying value?) while the real economy gets smashed, if, in fact, rates need to go higher.

Thanks and have a great weekend,

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.