Precious Metals Close To Next Six-Month Low

Precious metals have been correcting for about 12 weeks, and I think we are close to the next six-month low.

Miners failed to confirm Friday’s breakdown in gold as prices slipped below $1280. I’m not sure what that means just yet. The price action early next week will help narrow our focus.

The next cycle turning point arrives at the end of May. If prices bounce into that time frame, I see the potential for a head and shoulder pattern in GDX.

Consumer Sentiment

Sentiment collapsed last December with the stock market. The government shutdown added to consumer anxieties and intensified the decline. The breakdown was temporary, and sentiment recovered to 102.40 in May. Gold needs a sustained collapse in sentiment to drive the next uptrend. I think it’s just a matter of time given mounting political and economic pressures on the horizon.

GOLD

Prices closed below $1280, and it looks like gold is poised to test the lower boundary and 200-day MA around $1260. The only fly in the ointment is the miners; they failed to confirm gold's decline on Friday.

SILVER

Silver closed below the lower boundary and prices should be approaching the next six-month low. A test of the $13.86 low remains possible.

GDX

Miners showed relative strength on Thursday as gold slipped back below $1290; I found that peculiar. On Friday, the discrepancy was more pronounced as miners rallied and formed a small bullish engulfing candle. I’m beginning to see the potential for a head and shoulder pattern. The price action early next week will help narrow our focus. At the moment, I don’t see any reason to suspect a tradeable bottom. Progressive closes above $21.80 would support a buy signal.

GDXJ

Junior miners also showed relative strength on Friday. Prices have been consolidating over the last several weeks. I don’t see enough evidence to support a bottom at this time.

SPY 

If stocks can rally a bit further, I see the potential for a top around the 300 level.

WTIC

Progressive closes above $64.00 would imply a short-term breakout. A daily close below $61.00 would trigger a second leg lower to test $55.00 – $58.00.