After spending a week with clients at our Portfolio Accelerator and fielding countless reader emails, I completely agree!
Since gold and silver prices are getting a bit wild, I decided to dive straight into the Gold Rush mailbag today to start a healthy discussion about what might happen next…
What happened to gold/silver? Is the rally over?
-Parry
No, the rally isn't over.
Gold is consolidating below a critical extension level following a breakout to new all-time highs. And Silver is trading just off fresh decade-highs.
In many ways, it’s just getting started.
I can’t hold a bearish or neutral bias for precious metals while Silver trades above the 2020 highs of roughly 30.
The precious metals correction wasn’t pretty last week. But I’m happy to roll with the punches as long as silver futures hold their breakout.
Does the severity of the moves in gold really change anything as long as support holds? Does the severity of the retest really change the way the chart reads?
-Karim
Good question.
The short answer: No.
Last week’s move in Gold does not change my bullish outlook for the shiny yellow rock.
The primary uptrend remains intact as Gold digests its recent rally. A period of consolidation is warranted and welcomed.
Plus, Gold’s weekly decline of roughly 3.50%—though its largest drop year-to-date—failed to register a meaningful reading.
You can just call it a garden variety pullback:
On the other hand, gold futures turn sour if price undercuts the pivot lows from earlier this month at approximately 2,285.
Gold still looks good, but does it bother you at all that the last price high was not confirmed by the RSI? We got a bearish divergence there. Maybe that just warned us of the 10-point swift correction we just had?
-Eric
I have 99 problems – mostly hangry toddlers. But Gold ain’t one.
Yes, Gold still looks good:
And the bearish momentum divergence provided a fair warning of the imminent correction.
However, I place more value on weekly RSI divergences as they tend to accompany inflection points in the intermediate and primary trends.
Despite the recent bearish divergence, Gold’s momentum profile remains bullish as price consolidates within an uptrend.
