UPDATE ON GOLD, SILVER, and the BROAD STOCK MARKET (8:00 pm EDST)
In yesterday's post on Gold I wrote:
"...today's panic in equity markets also had a negative impact on the precious metals. Gold prices, however, did fall closer to our original corrective target of $1835. This puts us temporarily in the red, but this sub-cycle correction is due to end and bottom this week with a possible target low around $1815. If prices can hold above there tomorrow and Friday, I will likely hold this long position with the expectation of a sharp rally next week."
Gold is falling heavily again today. This is most likely the result of the Fed surprising investors and analysts yesterday with the likely "hawkish" prospect of raising interest rates in 2023 instead of 2024. Hawkishness is usually bullish for the U.S. dollar as investors perceive this to be the Fed acting fiscally responsible. Unfortunately, a rising dollar often pushes down the price of gold and silver. Today's fall in gold puts our long position in the red with around a 4% loss. Obviously, this is more loss than we expected. But we need to keep in mind that this sub-cycle bottom is due soon (maybe even this week), so a deep low is expected now and a snap back up could be imminent. Gold is admittedly below our target just above $1800, but silver is actually falling right into our target range (around $24.50 -$26.60). Silver (along with gold) is also in a reversal zone, and a major sub-cycle low for silver is due tomorrow. We should also consider that we enter a reversal zone specifically for currencies tomorrow (June 18 - June 28), so a top in the dollar (and a subsequent correction down) could be imminent (which could boost precious metal prices).
Based on this analysis, we are going to hold our long position in gold for now with a reasonable stop loss below the current low (depending on your loss tolerance) with the idea that a bottom is forming now (or very soon). I may decide to sell this position tomorrow if prices don't close the week above $1800.
Today the DOW continues to plunge (closing with a 210 point loss) while the S&P 500 and especially the NASDAQ seem quite buoyant. The S&P 500 closed with a tiny loss right on its 15-day moving average, and it is still above its 45-day moving average. The NASDAQ made yet another new weekly high and closed with a 121 point gain. It is looking very much like the DOW's medium-term cycle high was on May 10 at 35,091 and this index is now in the process of falling to its final cycle low. The S&P 500 and/or the NASDAQ, however, seem poised to make new all-time highs. Let's see if these last two indices can stay buoyant tomorrow or if a major downturn in equities has begun, Any short-selling will now be done with either the S&P 500 or NASDAQ as the DOW's correction may already be underway. Still on the sidelines of the broad stock market.
In yesterday's post on Gold I wrote:
"...today's panic in equity markets also had a negative impact on the precious metals. Gold prices, however, did fall closer to our original corrective target of $1835. This puts us temporarily in the red, but this sub-cycle correction is due to end and bottom this week with a possible target low around $1815. If prices can hold above there tomorrow and Friday, I will likely hold this long position with the expectation of a sharp rally next week."
Gold is falling heavily again today. This is most likely the result of the Fed surprising investors and analysts yesterday with the likely "hawkish" prospect of raising interest rates in 2023 instead of 2024. Hawkishness is usually bullish for the U.S. dollar as investors perceive this to be the Fed acting fiscally responsible. Unfortunately, a rising dollar often pushes down the price of gold and silver. Today's fall in gold puts our long position in the red with around a 4% loss. Obviously, this is more loss than we expected. But we need to keep in mind that this sub-cycle bottom is due soon (maybe even this week), so a deep low is expected now and a snap back up could be imminent. Gold is admittedly below our target just above $1800, but silver is actually falling right into our target range (around $24.50 -$26.60). Silver (along with gold) is also in a reversal zone, and a major sub-cycle low for silver is due tomorrow. We should also consider that we enter a reversal zone specifically for currencies tomorrow (June 18 - June 28), so a top in the dollar (and a subsequent correction down) could be imminent (which could boost precious metal prices).
Based on this analysis, we are going to hold our long position in gold for now with a reasonable stop loss below the current low (depending on your loss tolerance) with the idea that a bottom is forming now (or very soon). I may decide to sell this position tomorrow if prices don't close the week above $1800.
Today the DOW continues to plunge (closing with a 210 point loss) while the S&P 500 and especially the NASDAQ seem quite buoyant. The S&P 500 closed with a tiny loss right on its 15-day moving average, and it is still above its 45-day moving average. The NASDAQ made yet another new weekly high and closed with a 121 point gain. It is looking very much like the DOW's medium-term cycle high was on May 10 at 35,091 and this index is now in the process of falling to its final cycle low. The S&P 500 and/or the NASDAQ, however, seem poised to make new all-time highs. Let's see if these last two indices can stay buoyant tomorrow or if a major downturn in equities has begun, Any short-selling will now be done with either the S&P 500 or NASDAQ as the DOW's correction may already be underway. Still on the sidelines of the broad stock market.
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