Spot gold is consolidating above $1200, helped by continued softness in the dollar. However, yesterday’s retreat did degrade the short-term technical picture and returned some credence to the dominant downtrend.
Gold formed an outside day on Tuesday and then closed just below Monday’s low. This qualifies as a key reversal and it would be reasonable to expect some downside follow-through today. That has not materialized yet and yesterday’s low at 1199.67 remains intact thus far. The 20-day moving average (1199.56 today) provides additional support.
A definitive move back below $1200 would shift focus to secondary support at 1183.88/15. The 61.8% retracement level of the recent rally comes in at 1180.92, which is the key to unlocking the 1160.27 cycle low from 16-Aug.
On the other hand, if yesterday’s high at 1214.32 gives way first, gold would be back on track for a challenge of the 1230/40 zone, where short covering has the potential to really accelerate, shifting attention to the 100-day moving average at 1266.69.
Silver formed a key reversal on Tuesday as well, after getting rejected from the $15 level. Half of the recent corrective move has already been retraced. While the bears seem to remain firmly in control, they have not been able to generate much downside follow-through today.
The gold/silver ratio pressured 82 and may be thwarting downside progress. This is a historically very high ratio, which has in the past prompted selling gold for silver. It would be nice to see silver take the lead from here, but that starts with a convincing move above $15.
Platinum has been unable to score a close above its 20-day moving average (803.20 today) so far this week. Such a move is needed to clear the way for an upside extension into the 830/840 congestion zone and lend some credence to the bottoming scenario associated with diminished trade tensions with Mexico that specifically pertain to the auto/truck industry.
Palladium still seems optimistic about the U.S./Mexico trade agreement, defying the softer tone that prevails elsewhere in the precious metals. Palladium surged to a new 7-week high above the 100-day moving average (957.09 today) today.
A breach of the next chart level at 967.97 would set a new 10-week high. At that point, a move back above $1000 would have to be considered. The 200-day moving average at 989.90 provides a good intervening barrier.
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