From the Desk of Ian Culley @IanCulley
Gold is running into supply.
Whether the former 2011 highs still hold any psychological significance doesn’t matter.
Gold bulls continue to find an overwhelming amount of sellers at that level. This will remain the case until demand absorbs supply.
How long will that take? It’s anyone’s guess – maybe weeks, perhaps even months or quarters.
The point is, gold needs time.
Meanwhile, silver futures are coiling within a tight range…
Check out the daily chart of gold’s crazy cousin:
At first glance, the current consolidation appears to be a bull flag or pennant.
But, in their classic “Technical Analysis of Stock Trends,” Edwards and Magee issue a clear and present warning: “A pattern of this type that extends beyond three weeks should be watched with suspicion.”
Since the silver chart is working on the fifth week of contracting, the bull flag interpretation is losing credibility.
That doesn’t mean silver futures can’t rip higher here, of course. If they do, I’m buying strength above 24.80 with a tactical target of 27.50.
And if silver is trading above 25, keep an eye on SilverCrest Metals $SILV:
This $900M silver and gold mining stock has been in a bullish momentum regime since the summer of 2021.
Now it looks poised to reclaim a crucial extension level and its summer pivot highs from last year.
If and when SILV breaks above 7, we’re buyers with an initial target of 10.50 and a secondary objective of 16.50.
Our tactical bias is neutral until a decisive upside resolution.
Remember, you always have to know where you’re right, where you’re wrong, and where you’re getting out.
It’s a game of constantly updating your priors and adjusting your outlook.
With that in mind, I’m monitoring silver’s May and November pivot highs from last year at approximately 22.25.
A break below that level would signal a lack of risk appetite and would likely accompany a more significant pullback in gold.
To be clear, near-term weakness in silver wouldn’t change my structural outlook for precious metals.
But it would increase the likelihood of a longer digestion period for gold.
Stay tuned.
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Allstarcharts Team
