Gold Prices: Correction Or Crash? AG Thorson
Gold and silver met resistance at the $1,200 and $17.00 resistance levels, respectively. It's possible their common cycles topped today. Closing below today's lows will be the initial signs of an interim top.
What troubles me most is miners. In a strong bull market, they often lead the metals higher. Gold closed higher four consecutive days while miners failed to make new closing highs. I assumed they were consolidating the sharp move off the December lows, but now I’m concerned.
If miners move in a corrective (overlapping) type manner into a cycle low, I will consider this a pullback and buy the next low. But If prices move sharply below their 61.8% retracement levels, then we must assume the 8-year cycle forces are still in play. Breaking the December lows would lead to a capitulation selloff throughout the precious metals sector.
Silvers inability to exceed the previous high (lower high) coupled with the relative weakness in miners (topping on the 10th day of the cycle), hit the pause button on the bullish perspective outlined in the Weekend Newsletter. The way prices react out of this cycle high will provide us the guidance we seek.
US Dollar Chart
The dollar tested the 50-day EMA and then rallied into the close. A close above 101.77 tomorrow will support a cycle low.
Gold Price Chart
Gold prices tested $1,200 and closed just under this psychological barrier. It may take more than one attempt to breach the $1,200 level successfully. What concerns me, is that miners failed to make new highs while gold rallied four consecutive trading days. I see that as a potential warning. A constructive pullback should not see prices close below the $$1,155 level.
Silver Price Chart
Silver met significant resistance at the 50-day EMA. A pullback from here below the $16.00 level and the blue trendline would jeopardize the bullish posture. I will monitor for signs of a reversal if prices approach those levels.
GDX Chart
Miners diverged as gold rallied to fresh highs. Prices may still be consolidating the rapid advance. However, there should have been a breakout today if the trend was decisively bullish. Prices should find support at the $20.40 gap level during a pullback. Breaking sharply below $20.40 will support the possibility of a crash into an 8-year cycle low.
GDXJ Chart
Prices continue to probe the 200-day MA unsuccessfully. I expected a breakout today or by tomorrow at the latest. A correction should find support at the $31.00 level, snapping sharply below that level would be bearish.
SPY Chart
Prices broke sharply below the 20-day MA but somehow managed to close back above the 10-day EMA. Buyers continue to enter the market on pullbacks; it will take consecutive closes below the 10-day EMA to signal a correction phase.
WTIC Chart
Stocks and crude oil are trading hand-in-hand. Prices closing above the trendline will endanger the correction to the 200-day MA. The price action tomorrow is key; I'm contemplating shorting here.
Sharp declines in miners (6%+ on high volume) will place us squarely back into the 8-year cycle perspective. See recent articles for latent gold and silver targets. I will direct members as the price structure unfolds over the coming weeks.
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