Gold and silver moved lower today. Gold moved below its short-term rising support line ($1,725) and silver didn't move below its rising support line (approximately at $33.25).

The USD Index moved a bit higher today and it might be the case that those who didn't believe that precious metals formed a major bottom at the beginning of November and were betting on metals' rally only based on previous short-term weakness used dollar's small rally as a reason to close their positions. 

The True Seasonal patterns are favorable for precious metals, the major bottom seems to have been reached when gold moved to its 300-day moving average and the fundamental situation favors higher precious metals prices. The short-term breakdown in case of gold and weak performance of miners in the last several days is not enough to invalidate the above. 

Consequently, we believe that keeping long positions in gold, silver and mining stocks is a good idea. 

However, we do realize that this might (it's not likely in our view, though) be a beginning of another move lower that could take gold to $1,620, where it's declining resistance line is located (the one based on 2011 high and the late-February 2012 high), and we believe you should be prepared for that as well. 

Consequently, please add stop-loss orders to your long positions - $1,695 for gold, $32.7 for silver and 430 for the HUI Index. 

We suggest keeping your long-term precious metals investments intact.

As always, we'll keep you updated should our views on the market change - even if it means sending another message in several minutes.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA