It looks like gold and silver are having a delayed reaction to yesterday's strong surge in the U.S. dollar. Both metals plunged dramatically today. Fortunately, we got out of our silver longs on Tuesday, but we remained long in gold with the idea that the low of $1282 on May 21 was the start of a new medium-term cycle that was bullish. Today gold broke below $1282 so it is likely completing the final bottom of an older cycle. That's the bad news for our long position. The good news is that we are now entering another strong reversal zone for the precious metals next week so it is very likely this older cycle will bottom then. The fact that silver is still above the start of its May 1 cycle bottom of $16.06 creates a strong bullish divergence signal and further supports the idea of a bottom and reversal next week. I am going to hold my long position in gold for now as we still haven't broken our stop loss parameter of both gold breaking below $1282 and silver breaking below $16.13 and especially $16.07.
I will comment more on the precious metals and other markets this week-end.