Precious metals are finally showing signs of weakness, and it looks like their daily cycles topped. They may be attempting to bottom with miners. I’d be enthusiastic about buying the next bottom if miners didn’t diverge from gold over three weeks ago. That divergence, combined with the intense selling pressure leads me to believe the 6-month cycle for miners topped. If that is the case, then any bounce from the next low will disappoint and rollover.
It’s been 3-trading days since Monday’s recognition day in miners and metals have only closed once below their 10-day EMA’s. It could take a few more trading days before they reach a cycle low. I’ll alert members when it looks like we are getting a swing low and potential bottom.
I’ve been watching the Fed rate hike tool, and it has risen to a 79.7% probability for a March increase. Over 80% and the chances are pretty decent. They were 100% before the December hike. Janet Yellen speaks tomorrow at 1 PM, and that could affect these numbers dramatically. A suggested rate hike would put additional pressure on metals and miners.
There was buying on weakness numbers of 551-Million in GDX today. However, there was 204-Million and 301-Million of selling into strength two days earlier.
-US DOLLAR- The dollar closed above the 101.75 high, and we could see a run to the 103.50 resistance.
-GOLD- Prices finally closed below the 10-day EMA, and $1,264.90 appears to be the daily cycle high. We could see $1,220 support tested next. However, if Yellen’s speech tomorrow is hawkish, we could see an even deeper decline. A cycle top can’t be confirmed until there is a close beneath the trendline.
-SILVER- Prices finally broke their 5-day up streak, and the daily cycle topped at $18.54. The next support level arrives at $17.30.
-GDX- It’s been three trading days since the recognition day, and we may be getting close to an interim low. Yellen’s speech tomorrow at 1 PM could be a trigger event. Nevertheless, I’d probably wait for a confirmed price swing before attempting a short-term buy. Several factors support a 6-month cycle top at $25.71. Therefore, I doubt prices will make it back above the breakpoint ($24.60) before rolling over. Preliminary cycle work supports a 6-month low arriving in May.
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