The precious metals market moved lower today, so we're sending out a quick update. Gold moved below $1,660, silver moved below $31 and HUI Index moved below 540. At the moment of writing these words, whole sector is moving higher once again.

The question is if today's scary slide changes anything. The answer is that there's not much that we can tell before the markets close. Gold, silver and mining stocks moved briefly below their important support levels but are now very close to moving back above them. If they manage to do so and markets close above the support levels, then points made in the previous Premium Updates will remain up-to-date. If prices close below the support levels, the probability of a move to $1,900 in gold ($40 silver) will decrease. We will send you another message, should that be the case. The above-mentioned support levels are: gold: $1,660, silver: $30.80.

Another point worth keeping in mind is that gold price is currently at its 150-day moving average - moving to this level meant a major (!) bottom in each case since 2009. On the other hand, gold moved below the triangle pattern that we mentioned last week, which is not a bullish factor (the breakdown has not been confirmed so far, so it's not overly bearish either).

The USD Index moved higher, but is still below the long-term resistance line and previous highs, so the situation remains bearish. Similarly, the situation remains bullish for the general stock market. This provides a bullish picture for precious metals.

Summing up, there are several possible outcomes:

- if gold closes above $1,700 then nothing will change as far as our views on the market are concerned. Namely, we will continue to view the probability of $1,900 and $40 being reached (gold and silver respectively) before a move to $1,600 or lower at 75% or so,
- if gold closes above $1,660 but below $1,700 then, we will adjust our view on the probability of $1,900 and $40 being reached (gold and silver respectively) before a move to $1,600 or lower to 70% or so,
- if gold closes below $1,660, the probability of the above-mentioned targets being reached before a move to $1,600 (or lower) will be lower than 70%, but it's impossible to give an approximate probability because there are too many factors that are involved (like volume).

As always, we'll keep you updated if anything changes. Please note that the next Premium Update will be posted on Wednesday.

Thank you.

Sincerely,
Przemyslaw Radomski