Technical Scoop: Falling Records, Precious Waffle, Oil Languish

Excerpt from this week's: Technical Scoop: Falling Records, Precious Waffle, Oil Languish

Gold

Source: www.stockcharts.com

A pause week for gold? Or was it? This week we saw gold fall a little but gold stocks rose nicely. We are still trying to understand the pattern that appears to be forming. It appears as a five-point 1,2,3,4,5 reversal pattern. That suggests to us that the next move should be up. But we haven’t convinced ourselves of that yet. Thus, the ambiguity of symmetrical triangles. Is it a consolidation pattern, or a topping pattern? We continue to believe it’s the former, but to convince us we need to see new highs above $3,500. So far, we’re not getting that, even as silver, platinum, and copper made new 52-week highs this past week. It all suggests that gold should follow. The RSI indicator is pretty neutral here so it also is not giving us much of a clue as the next move.

Gold fell a small 0.4% this past week. The drivers were the ongoing trade deals announced by the White House, thus easing the thoughts of trade wars, and Trump downplaying his attacks on Fed Chair Jerome Powell. It all helped the US$ Index rise and lessened the need for safe havens such as gold. Silver was flat while platinum fell 1.3%. That was despite both metals making fresh 52-week highs. Palladium was down 2.1% but copper (a leading indicator, in our opinion) was up 4.1% to new all-time highs. Then the real counter came as we note the gold stocks were up nicely on the week. The Gold Bugs Index (HUI) rose 5.1% while the TSX Gold Index (TGD) gained 5.8%. The HUI made 52-week highs while the TGD made all-time highs.

The strong gold stock market, even as gold itself fell, tells us that the next move should be up for gold and that $3,500 should eventually fall. Our caveat would be for gold to fall under $3,300 and especially under $3,200. That signals to us that this current corrective period could be longer and deeper, pushing potential lows out into August even September. August is more likely, but we’ll have to wait and see. That the gold stocks rose this past week suggests they don’t believe gold’s fall this past week. That was especially noticeable on Friday when gold fell 0.9% but the HUI rose 0.8% and the TGD was up 1.7%.

We’re with the gold stocks on this one.

Read the FULL report here: Technical Scoop: Falling Records, Precious Waffle, Oil Languish

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