GOLD TRADE ALERT (2:15 pm EDT)
Gold and silver have been rallying strongly from the deep bottoms they made on July 10 (gold at $1212 and silver at $15.22) that may have been triggered by market manipulation (silver actually plunged to $14.34 intraday, but this data point has now been eliminated from most silver charts as it was considered to be an "aberration" caused by a single trader). The current rally is a typical rebound rally, but prices may not get far before turning down again. As I wrote in last week's blog on July 10:
"Gold and silver have now broken below the lows that started their current medium-term cycles (that was $1214 on May 9 for gold and $16.07 on May 9 for silver) which means that their cycles are likely pointed down for at least several more weeks and possibly longer. It is possible for gold prices to get as low as the $1150 area so we will watch for any short-term rallies now to possibly sell short."
We may be getting a short-term rally now that could be giving us a good spot to sell short. Gold is now testing significant resistance around $1240, and silver is approaching resistance in the $16.30 - $16.50 range and current directional momentum in both metals is mostly bearish. The U.S. Dollar Index has been falling over the last several days, but we are now entering a reversal zone for currency, and the dollar is approaching an important low it made last year in August which could offer at least temporary support for a weak rebound rally. Such a rally could push the precious metals lower. I should also note here that the Euro and Swiss Franc, two currencies that usually move in sync with gold and silver (as opposed to the U.S. Dollar which usually moves opposite these metals) are very close to cycle peaks and are making new highs as we move into this reversal zone for currencies. A reversal and correction in these two currencies would likely accompany a reversal in the precious metals. I am going to enter a short position in gold today and hold off shorting silver for now as it may move a bit higher. We can set a stop loss for this trade on a close above $1270. Conservative, longer-term traders may wish to avoid this trade and just wait for a final corrective bottom in the current medium-term cycles of both metals to buy (see July 13 blog).
Gold and silver have been rallying strongly from the deep bottoms they made on July 10 (gold at $1212 and silver at $15.22) that may have been triggered by market manipulation (silver actually plunged to $14.34 intraday, but this data point has now been eliminated from most silver charts as it was considered to be an "aberration" caused by a single trader). The current rally is a typical rebound rally, but prices may not get far before turning down again. As I wrote in last week's blog on July 10:
"Gold and silver have now broken below the lows that started their current medium-term cycles (that was $1214 on May 9 for gold and $16.07 on May 9 for silver) which means that their cycles are likely pointed down for at least several more weeks and possibly longer. It is possible for gold prices to get as low as the $1150 area so we will watch for any short-term rallies now to possibly sell short."
We may be getting a short-term rally now that could be giving us a good spot to sell short. Gold is now testing significant resistance around $1240, and silver is approaching resistance in the $16.30 - $16.50 range and current directional momentum in both metals is mostly bearish. The U.S. Dollar Index has been falling over the last several days, but we are now entering a reversal zone for currency, and the dollar is approaching an important low it made last year in August which could offer at least temporary support for a weak rebound rally. Such a rally could push the precious metals lower. I should also note here that the Euro and Swiss Franc, two currencies that usually move in sync with gold and silver (as opposed to the U.S. Dollar which usually moves opposite these metals) are very close to cycle peaks and are making new highs as we move into this reversal zone for currencies. A reversal and correction in these two currencies would likely accompany a reversal in the precious metals. I am going to enter a short position in gold today and hold off shorting silver for now as it may move a bit higher. We can set a stop loss for this trade on a close above $1270. Conservative, longer-term traders may wish to avoid this trade and just wait for a final corrective bottom in the current medium-term cycles of both metals to buy (see July 13 blog).
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