Gold is consolidating at the high end of Thursday’s range. The yellow metal appears poised to register a second consecutive higher weekly close; something that hasn’t happened since April!

Safe-haven buyers returned to the precious metals market after stocks took a two-day thumping on Wednesday and Thursday. While shares started Friday’s session on the mend, early gains could not be sustained. This will likely go down as the worst week for stocks since March.

While the dollar has rebounded somewhat today, it hasn’t really applied much pressure to gold. Given yesterday’s upside range breakout in gold, I see further short-term upside potential.

A true test of the 100-day moving average (1229.11 today) is considered likely, which happens to correspond closely with the 20-week MA (1227.92 today). As noted yesterday, a measuring objective off the range breakout highlights 1247.87.

A challenge of the latter would likely increase the pressure on the still significant speculative short position in the futures market. I suspect some bailed yesterday, but we have not seen a true squeeze yet.

If gold retreats yet again below $1200, it would demoralize the longs, making a retest of the 1160.27 low from 16-Aug likely. Intervening supports are marked by Thursday’s low at 1191.30 and the more formidable 1183.01/1180.77 level.

Silver was able to add to gains today, clearing the 61.8% retracement level of the decline off the 14.92 high. While silver has lagged on this week’s rally, as reflected by the rebound in the gold/silver ratio, the technical picture has improved here as well.

Scope is seen for a retest of the 14.92 peak from 02-Oct. A move above $15 would highlight 15.24, the 38.2% retracement level of the decline off the June high.

Platinum has negated resistance at 836.80/839.19 and closed above the 100-day MA and 20-week MA, lending considerable credence to the 2-month uptrend. The 100-day MA (833.18 today) is now acting as support.

The next resistance we’re watching is 858.92, 38.2% retracement of this year’s decline. This level corresponds with a minor high from 09-Jul.

Palladium has pulled back modestly from Thursday’s new 8-month high at 1097.03. A close below 1069.00 would result in a lower weekly close. In fact, a second consecutive lower weekly close.

The lack of upside follow-through is somewhat troubling, but as long as support at 1061.32 is intact – and probably more importantly the 20-day MA at 1056.91 – I still like a retest of the all-time high at 1139.62 (15-Jan).


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