It's getting very late in the medium-term cycle of gold. In fact, there's a possibility it might have ended with the $2003 low on Jan. 17. If that's the case, a new medium-term cycle started from there, and this market should be very bullish. But after breaking above the 15-day and 45-day moving averages last week, prices broke back below those averages yesterday, and this rally from Jan. 17 has been modest (so far). This means the old cycle could still be in place, and prices could move lower to the final cycle bottom due by the end of this month (which would actually be a good time for the final bottom as that would be inside a reversal zone specifically for the precious metals Feb. 21 - 29).
Another major concern we have with gold right now is that we are expecting a longer-term correction in gold that could take prices to $1900 or below, and that could happen anytime between now and July. If we are still in an older medium-term cycle, prices could take that steep drop now. If we already started a new medium-term cycle on Jan. 17, prices could rally a bit first before falling to that longer-term cycle low (if it happens). Either way, we have to be on guard for a significant price drop that could happen soon (older medium-term cycle) or later (new medium-term cycle). Any drop towards the $1900 area would be a good signal to go long - especially if it falls inside a reversal zone - because once that longer-term bottom is in, we expect a very strong rally in gold to exceed the recent all-time high at $2123. Let's wait and see if gold prices can move lower this week. If they can get to $1950 or lower, we may consider buying. If instead prices rally and break above $2100, we will have to assume a new medium-term cycle started Jan. 17, and we'll have to wait a little longer for a good spot to buy. We are on the sidelines of gold for now.
It is also late in the medium-term cycle of silver with its final bottom due anytime by the end of this month. But like gold, silver may have already started a new medium-term cycle from its low of $21.96 on Jan. 22. If it is a new cycle, prices could rally strongly now, but I do not think this is likely. I think prices could go lower from here to form the final bottom of an older medium-term cycle. We have a strong potential "pivot point" for silver coming up Wednesday through Friday, so this would be a good time for a final cycle bottom. A good target for a bottom could be around $21.70 - $22.00. If we see prices there over the next three days, we may look to go long. We are currently on the sidelines of silver.