Spot gold jumped to new 2-week highs on reports that the Trump administration is trying to restart trade talks before any new tariffs are implemented. The dollar index moved definitively back below 95.00, violating trendline support in the process.
The possible easing of trade tensions creates a risk-on environment that in years passed might have weighed on gold. However, more recently, the dollar has taken on the role of safe-haven (whether that’s deserved or not is subject to debate) and gold is trading more like a risk asset.
The breach of last week’s high at 1207.00 bodes well for a retest of the corrective high at 1214.32 (28-Aug high). The latter is further highlighted by the 50-day moving average at 1213.62 today. There is a minor chart point at 1208.87 that is holding so far, but intraday upside momentum has been good.
I anticipate a more convincing close above the 20-day moving average (1197.05 today), which may offer further encouragement to bulls. Weaker bears may be less inclined to exercise patience on this rally, given the very real risk of a short squeeze. Not that there wont be a spirited defense of resistance at 1213.62/1214.32 by the more committed shorts.
If 1214.32 is exceeded, gold has the potential to run toward the 100-day moving average (1252.70 today). On the other hand, if gold fails to clear 1214.32, further consolidative action around $1200 would be likely.
Silver remains confined to the low end of last Tuesday’s range. The high of the recent consolidative band at 12.30 (06-Sep high) has been approached, but remains intact thus far.
Silver’s comparative weakness continues to be reflected in the gold/silver ratio, which remains well bid near the 27-year high at 85.16. The ratio is trading modestly lower today, but a retreat below 82 is needed to suggest some more serious catch-up on the part of silver is in the offing.
The silver market is maintaining a record short position, so the upside potential could in fact be explosive if the shorts get spooked. That doesn’t seem imminent based on the charts, but frequently you just can’t see these things coming…
Platinum has firmed within the recent range, moving more convincingly above its 20-day moving average (789.25 today). Minor resistance at 801.27 has contained the upside thus far, but scope is seen for a retest of the 810.03 corrective high from 28-Aug. The latter is bolstered by the 50-day MA (811.28 today) and a violation is needed to set a more favorable technical tone.
Palladium continues to consolidate just off the recent highs. The 50-week (988.22 today) and 200-day (988.30) moving averages remain intact thus far, keeping the $1,000 level at bay. Recent price action has more the appearance of a continuation pattern than a top, even though the underlying trend remains bearish. I remain cautiously bullish.
Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Group LLC, unless otherwise expressly noted.
