The USD moved even lower today and gold (and more or less only gold) responded by moving higher - about $20 higher. At this point you might be wondering how it changes the outlook. Well… It really doesn’t. Earlier today we wrote that the breakdown in the USD was not confirmed and that the support came from the 50% Fibonacci retracement at about 97.75. Well, the USD Index is at 97.65, which is not far from it, and as the week is far from being over, the breakdowns in the USD itself are not confirmed either. Do you remember the May 2016 “breakdown” below the key lows in the USD Index? It turned out to be the final bottom and lower USD prices have not been seen since that time. Is the USD Index breaking lower at this time? It’s too early to say - the breakdowns are not confirmed and there are other important factors pointing to higher USD prices in the coming weeks and months.

As far as the relative strength of the reaction is concerned, there is virtually no reaction in silver (despite an intra-day upswing, which was more or less erased) and the reaction in mining stocks is rather small (it appears forced by the rally in gold) and changes little (if anything). Miners moved to their rising resistance line (marked in blue on the chart in our earlier alert) and to the 61.8% Fibonacci retracement. Technically, the upswing remains to be a correction, not the start of a new rally.

So, nothing really changed in silver and miners. It does appear to have changed in gold, but… Only until one actually looks at the gold chart. Gold was the only part of the precious metals market that didn’t move to some kind of strong resistance - until today. On the gold chart that we featured in today’s alert (as well as in the previous ones) you can see a rising red support line based on the December 2016 and March 2017 bottoms. This line was broken in early May and it has never been verified as resistance again, until today. Gold moved practically right to it and stopped. Is the rally over? Now, that gold, silver and mining stocks reached their strong resistance levels it’s certainly likely that this is the case or that it will be the case shortly.

As always, we’ll keep you - our subscribers - updated.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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