I did not expect another down week in gold but it is fine. As long as the key support at $850 holds. It’s a great chance to buy in at this level. The head and shoulder pattern hit its target of $850 to $860 already so the price should begin to stabilize or move up from here. It was not a fun week, but the bright side is that it’s over now!
All three moving averages are moving down. RSI is trending down and at very low levels on the six month chart. It needs to get above the downtrend line to signal some strength. MACD has broken down and is showing no sign of stopping. Slow STO is at extremely oversold levels. This chart with the indicators trend lines support lines and broken head and shoulders pattern tells me we should begin to flatten out and build steam for the next run up. See my weekly chart update for a longer term view to help but the big picture in perspective.
Silver broke the very strong support at $16.50. I did not expect this to happen even in the worst case scenario. See the longer term chart for more of an idea of what to expect.
All three moving averages are moving down. RSI remains bearish but is approaching a very oversold condition. MACD is oversold but can and looks to be heading lower. Slow STO is showing signs of a reversal in price. I don’t see how silver can remain this cheap for more than a couple of days. I spoke about a potential bear trap formation recently and I thought it was in but at higher levels. This is a true bear trap setting off massive technical sell signals and triggering many stops which cascade and exaggerate the move. Silver at this price is cheap and the best bargain anywhere, except maybe some quality junior and exploration shares.
Platinum looks like it has bottomed out finally. Unbelievably the price is still up some +20% over the past year although it may not have felt like it over the past month. There is strong support at $1,500 and $1,600. See long term charts for a better look. These lower prices may attract buying attention from auto manufacturers looking to secure some stocks at a much reduced price. Even though the American auto demand is off, we will soon see how the whole world is fairing. I think once the Olympics are over we will see a truer reading of demand.
Palladium continued its fall but is near strong support. $350 could not be held and $325 will be the next test. See the longer term charts for a big picture view on how truly cheap palladium is today, especially if you consider the decreasing purchasing power of the US dollar.
All moving averages are bearish. RSI is in deeply oversold territory and can stay here. MACD is showing a bit of a reduction in selling pressure and is at extremely low levels never see on this six month chart. Slow STO is moving up and at a key level which in the past has represented a good entry point into this market.
Well that’s a wrap. Let’s hope the sun shines this week both figuratively and in the true sense. As the comedian red Green says; "If you can’t be handsome you may as well be handy". The precious metals are far from handsome these days but they may come in handy in the not too far off future. Have a great week.
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