GOLD, SILVER and CRUDE OIL UPDATES (7:00 pm EDT)
Gold prices fell last week and closed below both the 15-day and 45-day moving averages. Today prices are up a bit, but they seem to be encountering resistance at the 15-day moving average. Last Tuesday I wrote:
"Gold rallied from a significant low ($1885) it made on Aug. 21, but we still don't know if that low was the start of a new medium-term cycle or if it was the mid-point sub-cycle correction of an older medium-term cycle that started on June 29 (at $1894). If the latter, the cycle has turned bearish (as it has broken below its starting point) and prices should be headed well below $1885 as the cycle moves to its final bottom."
All of this still applies, and a new reversal zone for the precious metals starts this Wednesday (Sept. 13 - 22). Right now it looks like prices could go either way (up or down), but resistance at those moving averages tends to suggest more downside. On the other hand, the U.S. Dollar Index may have made a significant peak last Thursday and could be in the process of a significant downward correction. If that's the case, it could give some upward momentum to both gold and silver. With all of that said, I think the rally from the Aug. 21 low seems to be rolling over, so I am going to go with the idea that this is an older cycle with prices headed below $1885.
We are now anticipating a significant low in gold due sometime between Sept. 22 and Oct. 13, and that low would ideally fall somewhere between $1850 and $1775. Because Sept. 22 is the last day of the upcoming reversal zone for the precious metals, we could see that low next week (Friday, the 22nd). But prices could also rise into the reversal zone and then turn back down to make a low later in the month or even early October. There are lots of possibilities here, and yes, things are a bit confusing at the moment. Let's stay on the sidelines for now and wait to see how gold prices move into our new reversal zone. Basically we are aiming to buy a low below $1850 that could happen in that Sept. 22 - Oct. 13 time frame.
While gold's cycle labeling is currently ambiguous, we are more certain of silver's medium-term cycle. Silver began a new medium-term cycle with its low of $22.12 on June 23. From there it rallied sharply to a high of $25.26 on Jul 20, and then it took a steep corrective drop back to $22.31 on Aug. 21. As I mentioned in my last blog, this sharp drop close to the start of the cycle is a bearish sign. Prices rebounded from that low but were not able to exceed the previous high (i.e. $25.26) - they barely touched $25 on Aug. 30, and they have been falling steeply from there into the present day. We are now close to the end of this medium-term cycle, and the trend is looking bearish. This means I expect the final low to break below the start of the cycle ($22.12). That final low could come as early as next week, or the correction could extend into October (even November). Silver's trend looks to be turning bearish, so if prices rally into our upcoming reversal zone for the precious metals (Sept. 13 - 22), we may look to sell short, possibly near resistance at the 15-day or 45-day moving averages (now both near $24). For now, we remain on the sidelines of silver. The final low of this medium-term cycle will determine whether or not the longer-term trend in silver (and possibly gold) has turned bearish.
Today crude oil made yet another new weekly high at $88.15 (Oct. contract chart). In last Tuesday's blog I wrote:
"It looks like crude oil may have started a new medium-term cycle with its low of $77.59 on Aug. 24 based on its steep rise from that low. But we are now in the center of another reversal zone specifically for crude (Sept.1 - Sept. 11)....Prices could edge a bit higher over the next several days, but a top and corrective drop seems imminent. If this is a new medium-term cycle, we would expect only a modest correction, but it's still possible the older cycle is in place. If it is, prices could drop lower and finally touch or break below the 45-day moving average to satisfy the requirement of an older medium-term cycle bottom. Either way, we are looking to buy the bottom of any correction as crude looks to be very bullish into the end of this year. Next week's general reversal zone (Sept. 13 - 21) would be a good place to look for a bottom."
All of this still applies. We note that today (Sept. 11) is technically the last day of crude's reversal zone, and the chart is looking very "toppy". A sharp fall from here wouldn't be unexpected. If that happens, and we get a low in our upcoming general reversal zone (Sept. 13 - 21), we may look for a spot to buy. On the other hand, if prices end up pushing higher into this same time frame, we will stand aside and wait to see what sort of correction follows. We are currently on the sidelines of crude oil,
Gold prices fell last week and closed below both the 15-day and 45-day moving averages. Today prices are up a bit, but they seem to be encountering resistance at the 15-day moving average. Last Tuesday I wrote:
"Gold rallied from a significant low ($1885) it made on Aug. 21, but we still don't know if that low was the start of a new medium-term cycle or if it was the mid-point sub-cycle correction of an older medium-term cycle that started on June 29 (at $1894). If the latter, the cycle has turned bearish (as it has broken below its starting point) and prices should be headed well below $1885 as the cycle moves to its final bottom."
All of this still applies, and a new reversal zone for the precious metals starts this Wednesday (Sept. 13 - 22). Right now it looks like prices could go either way (up or down), but resistance at those moving averages tends to suggest more downside. On the other hand, the U.S. Dollar Index may have made a significant peak last Thursday and could be in the process of a significant downward correction. If that's the case, it could give some upward momentum to both gold and silver. With all of that said, I think the rally from the Aug. 21 low seems to be rolling over, so I am going to go with the idea that this is an older cycle with prices headed below $1885.
We are now anticipating a significant low in gold due sometime between Sept. 22 and Oct. 13, and that low would ideally fall somewhere between $1850 and $1775. Because Sept. 22 is the last day of the upcoming reversal zone for the precious metals, we could see that low next week (Friday, the 22nd). But prices could also rise into the reversal zone and then turn back down to make a low later in the month or even early October. There are lots of possibilities here, and yes, things are a bit confusing at the moment. Let's stay on the sidelines for now and wait to see how gold prices move into our new reversal zone. Basically we are aiming to buy a low below $1850 that could happen in that Sept. 22 - Oct. 13 time frame.
While gold's cycle labeling is currently ambiguous, we are more certain of silver's medium-term cycle. Silver began a new medium-term cycle with its low of $22.12 on June 23. From there it rallied sharply to a high of $25.26 on Jul 20, and then it took a steep corrective drop back to $22.31 on Aug. 21. As I mentioned in my last blog, this sharp drop close to the start of the cycle is a bearish sign. Prices rebounded from that low but were not able to exceed the previous high (i.e. $25.26) - they barely touched $25 on Aug. 30, and they have been falling steeply from there into the present day. We are now close to the end of this medium-term cycle, and the trend is looking bearish. This means I expect the final low to break below the start of the cycle ($22.12). That final low could come as early as next week, or the correction could extend into October (even November). Silver's trend looks to be turning bearish, so if prices rally into our upcoming reversal zone for the precious metals (Sept. 13 - 22), we may look to sell short, possibly near resistance at the 15-day or 45-day moving averages (now both near $24). For now, we remain on the sidelines of silver. The final low of this medium-term cycle will determine whether or not the longer-term trend in silver (and possibly gold) has turned bearish.
Today crude oil made yet another new weekly high at $88.15 (Oct. contract chart). In last Tuesday's blog I wrote:
"It looks like crude oil may have started a new medium-term cycle with its low of $77.59 on Aug. 24 based on its steep rise from that low. But we are now in the center of another reversal zone specifically for crude (Sept.1 - Sept. 11)....Prices could edge a bit higher over the next several days, but a top and corrective drop seems imminent. If this is a new medium-term cycle, we would expect only a modest correction, but it's still possible the older cycle is in place. If it is, prices could drop lower and finally touch or break below the 45-day moving average to satisfy the requirement of an older medium-term cycle bottom. Either way, we are looking to buy the bottom of any correction as crude looks to be very bullish into the end of this year. Next week's general reversal zone (Sept. 13 - 21) would be a good place to look for a bottom."
All of this still applies. We note that today (Sept. 11) is technically the last day of crude's reversal zone, and the chart is looking very "toppy". A sharp fall from here wouldn't be unexpected. If that happens, and we get a low in our upcoming general reversal zone (Sept. 13 - 21), we may look for a spot to buy. On the other hand, if prices end up pushing higher into this same time frame, we will stand aside and wait to see what sort of correction follows. We are currently on the sidelines of crude oil,
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