Gold is generally well bid to start the holiday shortened week. U.S. markets will be closed on Thursday, November 22 for Thanksgiving and trading is generally quite thin on the day after.
Brexit uncertainty prevails, which has resulted in heightened political risks in the UK and a safe-haven bid for gold. Additionally, the dollar index is lower for a fifth consecutive session amid tempered Fed rate hike expectations.
Gold is trading higher for a fifth consecutive session and continues to probe above its 20-day moving average (1222.89 today). A close above the 20-day MA and a breach of 1225.44 (61.8% retrace of the recent retreat) would bode well for a short-term retest of the October high at 1243.44.
Last week’s failure to sustain the brief probe below the trendline and $1200 is seen as a generally positive technical event. However, we’d ideally like to see some more robust upside momentum emerge in the weeks ahead.
Alasdair Macleod reminds us in his most recent market report that gold has made a bottom in each of the last five Decembers. “Subsequent rallies into January and beyond averaged 18%, which would take gold to about $1400,” adds Macleod.
Such a move would constitute a more than 38.2% retracement of the entire decline off the 2011 record high at 1920.74. Further out, we’d be watching the $1500 zone with great interest. If gold can reclaim the 15-handle, it would be closer to that 1920.74 high than the post-financial-crisis low at 1046.18. That would be huge.
Silver is well bid at the high end of Friday’s range. The rebound from last week’s drop to a new 34-month low at 13.90 leaves me cautiously optimistic, as does the gold/silver ratio’s rejection from near 25-year highs above 86.
Silver needs to clear the 20-day moving average (14.47 today) and the 14.53 Fibonacci level (61.8% retrace of the recent downdraft to that 13.90 low) in order to provide some further encouragement for the bulls.
At this point, silver is hovering just around the midpoint of the recent range. Given the tendency for rallies over the past several months to fizzle, I’m disinclined to get too excited just yet. However, I continue to believe silver is undervalued at these levels, so my leanings are bullish.
Platinum has continued to retrace recent losses. More than half of last week’s decline has now been retraced, putting platinum back above the important 9- (849.14 today) and 20-day (846.58 today) MAs. The next retracement level to watch is 857.43. If this level gives way as well, focus is back on the 200-day MA (873.95 today) and the October high at 877.78.
Palladium is taking a breather after surging to new record highs last week. Friday’s low at 1151.11 marks initial support. Dips are still seen as buying opportunities within the well-established uptrend.
The $1200 level is the next upside objective. Above that, the 1223.25 Fibonacci projection corresponds closely with gold parity.
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