Neither gold or silver invalidated any of the major points that we outlined earlier today and yesterday, but we think you might appreciate a quick update regarding today’s news and price moves. Powell’s comments didn’t reveal much, but the subsequent portion of Twitter politics did. Trump just called all US companies to get out of China (precisely: to start looking for alternatives to China).
Of course this news emerged just as the USD Index was showing strength. It’s a desperate attempt to push the dollar lower. The USD is down by about 0.5% today, which is notable but not critical. This is a small breakdown below the rising support line that we discussed in today’s regular Gold & Silver Trading Alert - an unconfirmed one. The previous decline below this line was also triggered after Trump’s comments on China... And the small breakdown marked the end of the decline.
One important thing is the USD’s likelihood to invalidate the breakdown and rally once again, but the other thing is that...
After today’s move (and in light of the upcoming reply to China’s tariffs) there’s not much more that Trump can do with just talking. While it doesn’t mean that he’s out of bullets, it appears that his ability to easily shock the market with China-related comments is now much more limited than before. This means that not only it might be the case that the USD is bottoming right now, but that it might now be starting the rally that will not be stopped by additional threats.
The opposite applies to the precious metals market. Gold and silver moved close to their previous highs, buy didn’t rally above them. The mining stocks underperformed as they didn’t reach their previous highs today. There might be an additional reaction to comments on tariffs but it’s unlikely that they will add much to what was already been said or that they will increase the level of market’s surprise.
The China threat level reached extreme and metals are not breaking to new highs while miners are underperforming - this is bearish. Consequently, the outlook remains unchanged and so do long- and medium-term points that we made in the recent Alerts.
As always, we’ll keep you - our subscribers - updated.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
