From the Desk of Ian Culley @IanCulley
Strength begets strength.
Buyers taking control of a market heading into the weekend exude confidence. That describes gold bulls last Friday as they drove prices higher into the close.
To no surprise, Gold kicked off the new week gapping higher and rallying more than 2.5%. We call this bullish follow-through.
So what’s next for precious metals?
Most likely… More strength!
Check out the daily chart of Gold, highlighting last Friday’s candle in addition to that of the Friday, Nov. 4th session:
Both these candlestick formations are a visual representation of buyers’ willingness to take home additional risk over the weekend.
A sustained rally into an overwhelming amount of supply marked by the 2011 highs followed the bullish candle from Nov. 4th.
Based on today’s action, Gold appears to be kicking off another leg higher… In fact, short-term momentum for Gold – measured by the short-term rate of change, has not been this high in almost three years.
Here’s a look at Gold futures with the 2-day ROC, showing the highest reading since early 2020. This is when Gold was in the early stages of an epic rally to those all-time highs from August 2020.
And how about Silver and that 21.50 level?
For now, Silver bugs have reclaimed this critical polarity zone marked by the 2021 lows.
As long as we’re holding above this level, silver is back in the box, and the trend is rangebound. From a tactical perspective, a rally back toward the year-to-date highs ~24.75 would make sense and is very tradeable.
To be clear, if we break back below 21.50, we want to be on the sidelines regardless of one’s timeframe, as there is a heightened risk of owning precious metals.
Maybe a few bank blowups is all gold and silver needed to get back on track. We’ll be looking for follow-through in the coming days and weeks, but for now, we’re back above our risk levels and can start looking for long opportunities again.
Stay tuned.
Thanks for reading! As always, please let us know what you think.
There is no Gold Rush video this week, but we’ll be back in the studio next Monday.
Be sure to download this week’s Precious Metals Report in the meantime!
Allstarcharts Team
