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Gold Market News

Gold Breaks Through After 6 Years; Silver, Miners Confirming

Gold Price Chart

Gold Bugs Return from Exile

The long suffering (and diminishing) army of gold bugs, distraught over gold’s underperformance in the wake of asset inflation, government spending, and historically low (sometimes negative) interest rates over the last seven years, received a resounding message of hope yesterday when gold broke through long term resistance to top tick at 1397.70. Silver also broke through near term resistance of $15.15, and this morning gold miners also jumped higher and confirmed the breakout and retest of the long term down trend line from the 2011 highs. It all seems to be working at the moment for the precious metals sector. Let’s look at the charts.

Silver Chart

The 15.15 level has acted as support and resistance since mid-2017, and silver convincingly broke through that level in overnight trading, continuing it’s breakout from the wedge pattern it has been forming since the beginning of the year. With the 200 day moving average finally turning up, and RSI confirming, the move looks real, and the next key level is 16.20.

Silver Chart

Palladium Chart

Palladium has surprised to the upside. After breaking down from its long term trend line in May, the 61.8% Fibonacci retracement held, reversed, and retested in overnight trading. More importantly, price eclipsed the $1460 level, which had acted as support and resistance. Palladium needs to hold above this level, and more significantly, close back above that trend line to confirm that the bullish move has more length. If palladium succeeds in doing so, a test and breakout of all-time highs seems likely.

Palladium Chart

GDX and GDXJ

For the entire metals complex to move higher, we need the miners to show strength, and to the satisfaction of gold bugs, the charts of gold mining ETFs GDX and GDXJ have been textbook cases of breakout, retest, and launch. In the case of GDX, the down trend line, converging with the up trend line, converging with the 200 day moving average, which served as a launching point for this most recent bounce – is precisely how price needed to act for bulls.

GDX Chart

The chart of GDXJ is similar . . .

GDXJ

Other Mining Stocks

A junior mining and exploration stock I follow is Equinox Gold. The chart below shows a nice breakout this morning from an 18-month base.

EQX Chart

However, Pan American Silver and Freeport-McMoran and both have some work to do. In the case of Pan American specifically, the stock has some work to do to get above the key $14 level. Bulls want to see price push through the 200 day moving average and down trend line. I would look to get long on a break of horizontal resistance at $14.

PAAS Chart

Freeport-McMoran has been tap dancing along the 23.6% Fibonacci retracement level since late 2018. The stock is knocking on the door again here right at 200 day moving average. Bulls want to see a strong push through this level to target a retest of the 38.2% Fib level at $17.

FCX

The next month will determine much about whether the rate cuts that the market has now priced in – with some speculating about the possibility of a 50bps cut in July – will come to fruition, and whether the zeitgeist of modern monetary theory will propel markets higher. In that macro environment, it would stand to reason that metals should benefit and offer significant upside.

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Gold to New Highs; Honoring Key Resistance Levels

Gold hits $1362 in Overnight Trading

Gold Chart

The long term daily chart above highlights two potential falling (slightly) resistance lines from the peaks of the last six years. These lines are represented in black and red. Of particular note is how gold has reacted to these lines in the last few weeks – honoring both to the tick. This trading action is more evident on the 4 hr chart (below).

Gold 4h Chart

The trading community is watching alertly for a break of this $1362 level, and especially the $1395-$1400 level, which is the 38.1% Fibonacci retracement from the 2011 peak to the 2015 low. If gold breaks above each of these levels there is blue sky above for a move to at least $1480.

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Moment of Truth for Palladium

Testing Resistance

Palladium Chart

The palladium price broke up from its first test of resistance (blue trend line) and is now in the process of testing its second resistance line (red trend line). This action comes on the heels of a successful test of the 61.8% Fibonacci retracement from the August lows to the March peak, as shown in the chart below.

 

Palladium Fibonacci

I would also add that the chart appeared to me to be forming a bear flag (a near term pull back) before resuming its downtrend. This flag broke up this morning (very rare), negating the likelihood of that move.

Palladium Bear Flag

The key price level is $1460. A move above resistance at $1460 should usher in a retest of all-time highs.

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An Update on Metals

Silver

Gold looks bullish; Platinum, not so much

Here is a quick snapshot of the metals sector. The silver chart above is constructive, as silver broke out of a falling wedge and confirmed the bullish action in gold. It also successfully hit its initial target of $15.15-$15.20. The support levels to watch now are $14.30-$14.50, where silver may retest falling wedge support (formerly resistance) and the trend line from the August lows. A break above $15.20 should target a move to $16.20.

gold chart

Gold remains in a solid uptrend. The three month bull flag consolidation and subsequent breakout in gold from the August low to the February peak suggests a measured move to $1480 if/when gold breaks through long term overhead resistance ~$1360-65. On the downside, $1280-$1290 needs to hold to prevent a breakdown.

Platinum chart

The platinum chart is ugly. Platinum simply has no momentum and must fight through a series of falling trend lines to show any sign of life. Until platinum breaks $1000/oz, it will just be trend-less and choppy, and if $755 fails to hold on the downside – look out below.

Palladium Chart

The palladium chart is attempting a third retest of resistance (prior support). If it can manage to break through above that resistance line, it would send a very bullish signal. Personally, the action from the low to this retest looks me to be a bear flag with further downside to come.

30-year chart

Lastly, copper is at a VERY critical juncture here testing long term support. The chart above is the 30-yr log chart, while the chart below is the 3-yr arithmetic chart.

Copper Arithmetic

Copper tends to be a leading indicator and indicative of global growth prospects. Where the copper price moves from here will send a key signal.

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Gold Retests $1350

Gold ChartGold retested $1350 in overnight trading, extending this current move more than $84 in the last couple of months. The chart above is admittedly busier than I generally like, but so much is happening technically with the gold price.

Gold successfully retested falling support from the 2011 peak (red line) at $1180 in late-2018. This coincided with a successful retest of rising support from the 2015 low. Gold is now meeting resistance from prior peaks between 1350-1370 during every attempt over the last 6 years to break out.

It would seem very plausible that gold could make one final retest at the $1280 level where two channel support lines converge with arc support and the 200 day moving average. This would likely wash out all new gold bulls.

The gold chart is very bullish and could easily break through six years of resistance within the next few months. Conversely, a break of $1280, while lower probability in my estimation, would do significant technical damage. Either way, up or down, the remainder of the year should reignite gold volatility and define the prevailing trend for years to come.

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Gold, Silver Breaking Out

The precious metals sector has continued the momentum it closed with in May. Gold and silver, in particular have been surging this first trading day in June. Let’s take a look at the technicals.

Gold has moved from a bottom at 1167 last July to a peak at 1350 in February. Beginning in February, volatility began narrowing and gold has been mired in a falling wedge pattern. According to Bulkowski (2010), 92% of falling wedge patterns break to the upside, and of those that break, 90% reach the upside target which is measured as the distance from the breakout move to peak, added to the recent breakout. I see the original break as $1238, so in this case, that would set an upside objective at $1400-$1420.

Furthermore, the fact that gold did not retest the support line at ~$1250 speaks to the strength of the bulls here, along with the positive RSI divergence (bottom indicator). Probabilities favor the bulls here.

Silver has been the laggard, as the gold:silver ratio has hit 90 – its highest level since October 2008. I real bull market should see this ratio decline precipitously with silver outperforming gold.

Silver Chart

While gold broke its falling wedge pattern on Friday, silver broke this pattern this morning and is now confirming the gold breakout. Technically, this move could push silver to the $16 level.

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Oil Priced in Gold Breaking Down

During this past week ending May 31st, 2019, oil sold off sharply, closing the week down almost $6 to $53.37, while gold rallied to close the week at $1305.50. I like to monitor the price of oil in gold terms, and to do that I use 100 barrels of oil as the numerator and the price of one ounce of gold as the denominator.

This ratio has been in a downtrend channel for a decade, with a countertrend move beginning in 2016 and failing recently during the oil sell-off last fall, which led to the breakdown of the blue channel. Oil has since tried to retest that support line through the first part of this year, but failed the retest last week. This failure is bearish, meaning that it indicates a lower ratio going forward, which should be strong for gold and weak for oil.

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Gold and Silver Fetch a Bid on Market Sell-off

Following weeks of low volatility, where the CBOE Gold Volatility Index fell to a decade low of 8.75, gold rallied $15 per ounce today to close at $1284. Simultaneously, the US dollar broke above heavy resistance (briefly) at 98. As the dollar goes, so go the metals.

Gold has been forming a long, rounded bottom since 2013, and the chart looks constructive. The bull case for gold technically is that the price has remained above the 200 day moving average for the entirety of 2019, and the 200 DMA is now turning up. Gold also pushed into overbought territory on the Relative Strength Index (RSI) earlier this year, and as not oversold, which indicates that gold still has positive momentum.

The bear case is that gold has struggled to push through the 38% Fibonacci retracement from the 2011 highs to the 2015 lows, and remains stuck in a multi-year triangle. Silver has also failed to confirm, as demonstrated in the chart below. Silver’s weakness seems coupled to the base metals sector, which has sold off as part of a global slowdown. Silver remains below its 200 day moving average, and while it fetched a bid today at trend line support, it still has some work to to do break out of the downward channel.

Silver

Charts Made with Optuma Software

The future for metals prices depends on the dollar index. A definitive breakthrough above 98 will likely put a ceiling on any intermediate rally.

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The Week Ahead In Gold – Aug 20, 2018

Written by Border Gold     Aug 20, 2018

The gold market is seeing a bit of a bounce in early action Monday to kick off the new trading week. Trading volumes remain subdued, however, as many investors wrap up late summer vacations. (more…)

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Troy Ounce vs Ounce

What is a Troy Ounce?

First-time precious metals buyers are often confused by the difference between a troy ounce (ozt) and a “regular” ounce, especially when their 100 oz silver bar actually weighs 6.85 lbs on the scale instead of 6.25 lbs. Did they receive more silver than they paid for? The answer lies in an antiquated system of measurement still used today for precious metals known as troy weights. (more…)

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How Much is Gold Worth

How much is gold worth? Under normal circumstances most of us don’t dwell on how a product we pick up on a store shelf came to get its price. If we take a few moments to contemplate the raw materials, labor and transportation costs needed for that product to reach us, not to mention the retailer’s markup, it is clear that the price assigned to a given product is the result of a series of complex yet logical forces involving various actors and transactions throughout the supply chain. Is the price of gold any different? (more…)

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The Week Ahead In Gold – Aug 7, 2018

Written by Border Gold     Aug 7, 2018

The gold market continues to see selling pressure as the market searches for a bottom. Although the big, round $1200 per-ounce level is not far off, the market may need to do more work on the downside before it is able to build a long-term base. Low summer trading volumes and scant risk aversion are not doing the market any favors. (more…)

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