Chart 1: Precious metals have reversed yet again at a major resistance:
In a post a few days ago I said that "I wasn't yet convinced PMs have truly bottomed, so just as easily we could see a downside break." This was written just as prices were touching resistance on both Gold and Silver. There are a few reasons I hold this short term view:
- The tape is not behaving as if we are in an uptrend, but rather still in a downtrend.
- Gold is still officially in a downtrend according to all simple technical rules.
- The sentiment on the US dollar is so negative (which I covered few days ago) that it would not surprise me to see it outperform other currencies for a while, and therefore also put pressure on the overall PM sector.
Chart 2: US Dollar sentiment is extremely negative right now
Essentially, my stance continues to be that if we do see breaks towards lower lows in both Gold (last low was $1189) and Silver (last low was $18.18), it would be a major buying opportunity and most likely a final low in the current PM correction, which resembles the 1974-76 period where Gold corrected by 50%.