Technical Scoop: Volatile Reversal, Rate Angst, Bubble Liquidity

Excerpt from this week's: Technical Scoop: Volatile Reversal, Rate Angst, Bubble Liquidity

Source: www.stockcharts.com

So, we have talk of a peace deal between Russia/Ukraine, along with talk on whether the Fed will stand pat in December or lower rates. Talk of the Fed staying pat helped push gold prices down, while talk of an interest rate cut helped gold prices to rise. Also, there was the somewhat friendly jobs report that favoured the bearish camp. Prices rebounded on Friday, following suggestions from Fed officials that an interest rate cut might still be on. But, as a reminder, we have noted the Fed is divided for the first time in years.

On the week, gold fell 0.5% but remains up a healthy 53.8% on the year. Silver fell 1.4%, platinum was down 2.3%, and of the near precious metals, palladium was off 1.9% and copper fell 1.0%. The gold stocks naturally fell as well. The Gold Bugs Index (HUI) lost 3.4% while the TSX Gold Index (TGD) dropped 3.3%. A lousy week all around, but definitely not a disastrous week. Of concern is that gold fell from its high of $4,381, hitting a low of $3,886 before rebounding back up to $4,245. Given that it fell short of the previous high it’s a signal that we could now be on a C wave down. A break back under $3,886 could, in theory, project down to $3,400. That would be about a 13% correction. A reminder that, during the 2009–2011 gold bull market, gold fell twice around 13%–15% and three other times as well where the decline approached 10%. A correction of that nature is not unusual. Since this rally started in 2022, we’ve already had one correction of 13% and two other corrections of under 10%. We still expect a potential low into December before another up leg gets underway. Could the Fed at its December 9–10 meeting be the catalyst? We remember well the Fed meeting of December

2015 that ignited a strong gold rally into 2016. Could lightning strike twice?

Source: www.stockcharts.com

Silver, like gold, took it a bit under the chin this past week, given all the talk that the Fed won’t cut, then that the Fed will cut. Silver fell 1.4% but remains up 70.7% on the year. No matter how one looks at it, silver and the precious metals have had a good year. The gold/silver ratio is at 81.32, well off its high of 107.66 but still above a potential breakdown zone at 76 and especially under 75. Silver’s high was $54.49, and the recent rebound took it only to $54.40 before turning down again. Is it a double top? We don’t know yet. The neckline is near $48.30 and under $48 silver looks a bit shaky. If it is a double top, the breakdown could project a drop, down to $39.50 near the 200-day MA. There is interim support at $45 and $41/$42. The chart looks a bit negative with that potential double top. New highs would end any discussion of a double top.

Source: www.stockcharts.com

Given weakness in the broader stock market, it is probably no surprise that gold stocks have also been weak. Both gold and silver are also off their highs. In a down market, as in an up market, the gold stocks tend to lead. While gold was off 0.5% and silver down 1.4% this past week the gold stock indices fell more. The Gold Bugs Index (HUI) dropped 3.4% and the TSX Gold Index (TGD) fell 3.3%. Altogether, the HUI is down 14.3% and the TGD is down 12.5% from their respective all-time highs. That’s correction territory. As the chart of the TGD shows, we continue to hold above the 50-day MA, but will that last if the stock market continues to fall? A breakdown under 700 could suggest a fall to better support around 635. The recent rebound was well short of the recent all-time high. That’s a negative sign as only new highs tells us the low is in. The RSI is neutral. We await a fall for the RSI under 30 to suggest that a bottom may be in progress. The junior developer gold stocks have also been under a bit of pressure of late. That’s no surprise as they tend to fall faster in a down market, just as they rise faster in an up market.

Read the FULL story here: Technical Scoop: Volatile Reversal, Rate Angst, Bubble Liquidity

Copyright David Chapman 2025

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