Gold and silver prices moved lower today. Gold appears to be closing around $1058, a bit below my suggested stop loss area of $1060. Silver dropped to $13.97 but snapped back up and seems to be holding above $14 which is well above my suggested $13.90 stop. Gold is making a new monthly low while silver is not (its low was $13.92 on Monday) so this could be a case of bullish intermarket divergence (as long as silver stays above $13.92) and these metals could rally now. But it has to be now as the reversal zone for precious metals ends next week on Monday. The U.S. Dollar Index broke over 100 and reached 100.20 this morning, but is now (2:00 pm EST) falling back. It may or may not close above 100, but there continues to be strong resistance for the dollar up to 100.50 so we could still see a pullback from any point below there. Despite today's sharp drop in gold's spot price, GDX (the gold and silver mining company ETF that mirrors the NYSE Arca Gold Miner's Index) remained stable and strongly above a support line (just above 13) that has been forming over the last few weeks. GDX may be a better gauge of the precious metals sector right now as spot prices can be a little jittery and, as I've mentioned before on the site, gold and silver mining company stock prices often lead the actual price of the metals. There is currently strong support for GDX from 13 down to 12.5. Based on all of this, I am going to hold my long position in gold and silver, at least until Monday. Any traders that were stopped out of gold can stay out until we see how prices move next week. As mentioned above, we don't want to see silver prices break below $13.92 or gold and silver continue lower past Monday.
The broad stock market has been very quiet this week with little rallying which is unusual for a holiday week, especially near Christmas. This could be a bearish sign. We did not, however, get any bearish intermarket divergence signal this week where one or two of the three major stock market indices (DOW, S&P 500 and NASDAQ) make(s) a new monthly high, but not all three. That could still happen on Monday and would be a good signal to sell short. If this market continues to rally past Monday, we may have to wait until the second week of December before we see the market turn down. Still on the sidelines of the broad stock market and waiting to sell short a correction to the bottom of the current medium-term cycle..