The short-term outlook for the GLD ETF is slightly more positive than for spot gold, but this divergence doesn't change the overall short-term trend as there has been no breakout in case of any of them. In case of the GLD ETF, we have recently seen a move to the declining resistance line based on the August and mid-September highs, but without a breakout. In case of spot gold, we see that the price didn't even reach this level. In both cases, the short-term trend remains down.

Silver closed the week above the 2008 high and the 61.8% Fibonacci retracement level based on the entire bull market - dropping a mere $0.05 last week, which means that the outlook is generally unchanged from what we wrote last week. There was a slight improvement - based on the intra-week decline followed by a pullback which created a weekly reversal candlestick.

The general stock market seems to have bottomed - at least on a short-term basis. In last week's Premium Update we wrote the following: "As we see on the above chart, stocks moved close to their short-term support line, which might be enough to stop the decline." At this time, it seems that the decline is already over and that the trend is up once again.

Meanwhile, the mining stocks sector continues to decline at a moderate pace, without any additional pullbacks to the neck level of the previously completed head-and-shoulders formation. It still seems that even if we saw a breakout above the declining resistance line in case of gold, mining stocks would simply correct to the neck level and then decline once again.

The situation could become bullish for gold and silver on a temporary basis and this is confirmed also by the analysis of the crude oil sector. Quoting from Nadia Simmons' last Oil Trading Alert:

"Earlier on Wednesday, crude oil dropped to its daily low at $101.43, however, oil bulls didn’t give up and manage to hold this level once again. This positive event triggered a pullback, which pushed light crude to its intraday high of $104.23. With this move the price of light crude came back above the 38.2% Fibonacci retracement level and the breakdown below this level was invalidated. Additionally, we saw an upward move to the previously-broken rising medium-term support line and crude oil closed the whole day almost at this line.

Please note that if we see a breakout above this line we could see a move up to the declining short-term resistance line based on Aug 28 and Sep 19 highs – currently close to the $107.5 level. If we see a confirmed breakout above this line (in this case one daily close would serve as a confirmation), we will likely open speculative long positions. Until such a breakout is seen, long positions don’t seem to be worth it, as any resulting rallies are likely to be stopped by the above-mentioned resistance line."

At this time, it seems that we could see some short-term strength in the precious metals and crude oil sectors (even though the medium-term trend for metals is down), however, it doesn't seem that taking any speculative positions is appropriate now, as the situation seems too unclear.

To summarize:

Trading – PR: No positions.

Long-term investments: A half position in gold, silver, platinum and mining stocks. As far as long-term mining stock selection is concerned, we suggest using our tools before making purchases: the Golden StockPicker and the Silver StockPicker

As always, we'll keep you updated should our views on the market change. We will continue to send out Market Alerts on a daily basis (except when Premium Updates are posted) at least until the end of October, 2013 and we will send additional Market Alerts whenever appropriate.

As a reminder, Market Alerts are posted before or on each trading day (we usually post them before the opening bell, but we don't promise doing that each day). If there's anything urgent we will send you an additional small alert before posting the main one.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA