It was another emotionally charged week as softer inflation data on Wednesday and Thursday sparked panic short covering in U.S. Equities.
Immediately investors recalibrated their portfolios and their interest rate hike expectations for the September 21 FOMC meeting. Investors went "risk on" as a weaker Core CPI (0.3% vs. 0.5% estimate) report helped to support the Fed's proposed "soft landing" narrative. The Federal Reserve now faces an apparent dilemma if it stops tightening and pivots too soon, it will reignite the economy, and inflation will come roaring back. While if they pump the breaks and continue to tighten, it will slow the economy, taking down corporate profits, consumer spending, and the whole market. That is why we believe the Precious Metals markets and many of the 27 other commodities we actively risk manage are heading for another fork in the road.
Daily Gold Chart
Over the past two decades working in Futures and Commodities, I have seen Precious Metals traders and commodity investors face the same problem. The market forms a bottom, reverses sharply in the desired direction, and achieves levels where a new trend could begin. We can illustrate on the daily chart that, technically, Gold needs to see a clear breakthrough of resistance to indicate that this bull market has legs. However, we also need to implement a risk management strategy if an actual corporate recession takes hold where earnings decline, volatility increases, and outside asset classes fall. That is where, with a substantial amount of modeling and stress testing, we formulated specific entry and exit points on precious metals in our daily Tactical Insights research report. If you request a free two-week trial of the Morning Express, you will also get Tactical Insights here: You can register here: The Blue Line Express Two-Week Free Trial Sign up.
Daily Silver Chart
While Gold is in the early stages of another potential breakout, Silver is another market that we are actively long, with trailing stops at $19.55. Critical support remains near $20, as identified in our research, and crowding analysis shows managed money covering their net short position as the new climate bill sparks increased demand for Copper, Platinum, and Silver. To help you identify different technical analysis formations, we create a Free New "5-Step Technical Analysis Guide to Gold but can easily apply to Silver." The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.
