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Gold/Silver: The two levels every precious metals trader is watching

Commentaries & Views

Precious Metals ended the week on a sour note after the monthly employment data showed 339,000 jobs were created in May, crushing the expectations of 193,000. The reaction produced a bid in the U.S. Dollar, Treasury Yields, U.S. Equities, and Energies. However, looking back on the week, both Gold and Silver both added 2% giving us an indication that a bottom is forming from the recent selloff. Platinum futures dipped below $1000/oz for the first time in two months, and Copper futures received a "lift-off" from positive manufacturing data out of China. I expect Precious Metals to continue its recovery next week if we can get a sustained rally over $2008 on Gold and $24.17 on Silver.

Daily Gold Chart

Since challenging all-time highs in early May, Gold futures have traded lower for three weeks before running into critical support at $1950/oz. We remain optimistic that a near-term bottom is in place and that overhead resistance lands at two levels. We will want to watch the psychological $2000 level and ultimately $2008 as your breakout level. Any close over $2008 should trigger a short-covering rally. Remember, every bull market begins with a short-covering rally.

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Daily Silver Chart

Silver's recovery this week was fueled by a local top in the U.S. Dollar and a reversal in the Copper market. The 50% retracement level on the daily chart near $23 proved an excellent opportunity to add to core positions using the December 1000 oz Silver contract. Tightness in the physical markets, a decline in mining supply, and solar and EV demand should offset any potential for prices to decline further. Over the next 18-24 months, we expect Copper to make new all-time highs and Silver to break $35/oz.

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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.