Gold, silver, and miners rallied yesterday, and in today’s pre-market trading, gold and silver are both up – despite a small move higher in the USD Index.
This suggests that the rally in the former is not yet over, just as the decline is in the latter. In other words, the profits on the current long positions in the mining stocks are likely to increase shortly.
Gold bottomed on Thursday, very close (in terms of hours) to when I wrote about it, and it’s been moving higher since that time – this rally is visible even from the medium-term point of view.
Based on the above chart, gold could rally to the previously broken, rising line and verify it as resistance. This line is currently at about $2,660, so that’s one of the upside targets for gold. Let’s zoom in for more details.
On the above chart, we can see that gold is entering the target area based on the 38.2% and 50% Fibonacci retracements, as well as the declining resistance line.
The resistance line is falling quite quickly, so depending on when it is reached it might have different values. However, it is trading close to the above-mentioned $2,660 level – at about $2,650 - $2,655.
Consequently, the $2,650-$2,660 seems to be the more likely target area within the broader target area that you can see on the above chart.
In yesterday’s analysis, I commented on the above chart in the following way:
The USD Index is holding up very well despite reaching its previous highs and the 50% Fibonacci retracement based on the 2023 slide.
This suggests that if the USD Index declines more visibly, gold, silver, and mining stocks might rally in a more meaningful way. This, in turn, might imply that my original profit-take level for the current long position was placed too conservatively and that perhaps I should move it higher.
Let’s see how the markets close today – so far, they’ve been open for just two hours today and a lot can still happen before the closing bell. I’ll provide an intraday Gold Trading Alert if a higher profit-take level becomes justified, as given this kind of volatility, the current target can be reached shortly.
The USDX indeed closed lower yesterday, but it is back up in today’s pre-market trading. This could be the B part of an ABC corrective pattern.
I previously thought that the USD Index could decline in a more meaningful way here, however, after looking at what happened after the previous tops that formed in the 106 – 107 area, I reconsidered.
Starting with the October 2023 high, we see that the USDX declined right after topping but not significantly so – and even if, then not immediately. Instead, it initially declined to (approximately) the 105.4 - 105.8 area. Consequently, this is where I expect it to move in the near term. This would likely correspond to another small wave up in the precious metals market, which perfectly fits what I wrote previously today.
Quoting my previous comments on the above GDX ETF chart:
Well, it looks like you closed the short positions in the GDXJ and opened long ones in the GDX right on the day it formed the bottom (at least if you followed Thursday’s Gold Trading Alert that is) – congratulations!
(…)
The one thing that I’d like to add here is a note about the current position of the RSI indicator based on the GDX ETF.
Namely, it moved below 30, which – in all recent cases – marked at least short-term buying opportunities. As the history tends to rhyme, we’re likely to experience a rebound also in the near-term future.
Indeed, the rally followed the buy signal from the RSI. If you look at the previous cases when we saw similar signals, the rallies in the GDX and the RSI based on it were bigger than what we saw so far. So, it does seem likely that the rally will continue in the short term.
As far as silver is concerned, I wrote the following on Thursday:
Silver didn’t move to my likely target levels yet, but it did move to the $30 level which served as resistance multiple times. In fact, it moved back below this level and then moved above it once again. It looks kind of like breakout’s verification.
To clarify, I don’t think that the $30 level will hold as support in the following weeks/months, but it might trigger a corrective upswing now. Silver could rally to $32.5 or so during this correction – that’s where it already topped once.
The main reason for it is the situation in the USD Index and the fact that gold reached one of its support levels as well.
At the moment of writing these words, silver is more than halfway there – at about $31.5. The above-mentioned target for silver remains up-to-date (at the moment of writing these words – this might change).
For those who followed my Thursday’s Gold Trading Alert (or even Friday’s free analysis), your profits from this long position are increasing - congratulations once again.
Also, I would like to take this opportunity to wish all the best to all of you, who celebrate today’s important holiday.
It’s International Men’s Day, and even though Google didn’t grant men with a special doodle on their logotype and Facebook is just as quiet… I wholeheartedly wish you all the best, both personally and on behalf of the entire Golden Meadow team.
May you win the hard battles that you tell no one about. You got this.
Thank you for all the great things that you do, and thank you for being you.
The full version of today’s analysis (my Gold Trading Alert) includes the discussion regarding updating the upside profit-take level for the long position in the GDX. Also, please note that my subscribers get intraday Alerts whenever necessary. And it looks like this will be necessary soon. I encourage you to get those premium details and subscribe to Gold Trading Alerts today. They are also available as a part of the prestigious Diamond Package (that’s our best package – if you can afford it – definitely go for it). Alternatively, if you’re not ready to subscribe yet, I encourage you to sign up for my free gold newsletter today.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief