Gold Prices Are Holding Above The $1,230 Level

Gold prices are holding above the $1,230 level, and the daily cycle low is possible. However, prices dropped to $1,221 before rallying yesterday. Because prices reached a new low, it now requires a daily close above $1,242 to form a proper swing. Until a swing low forms, I can’t be sure this daily cycle bottomed.

Silver prices need a daily close above $16.65 to form an official swing low.

The Fed watch tool climbed to an 83.1% probability of a June rate hike. It was around 63% just two weeks ago. Precious Metals tend to form significant bottoms around these announcements (December 2015/2016). For this reason, I think the 6-Month cycle low will probably arrive in mid-June around the time of the Fed meeting.

In the meantime, prices could bounce or consolidate. Ideally, gold prices won’t rebound above the $1,255-$1,275 level. Silver’s bounce should hold below $17.25-$17.60.

GDX- Prices closed the gap from Thursday, an interim low is likely. Prices could rebound to between $22.50 and $23.50. I’m not sure it’s worth trying to play the potential bounce higher.

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Junior miners have significant rebalancing issues. Their prices will remain under pressure until the reallocation is complete. Here is an article describing their dilemma. GDXJ Rebalancing to Leave Smaller Gold Stocks in the Cold.

Conclusion: The probabilities favor a 6-Month low arriving in June, around the time of the next Fed meeting. Trading between now and then could be challenging and unpredictable. I will monitor the rebound… if we get one. There might be another chance to short in a week or two. I don’t intend to trade the potential rebound higher.