Gold moved above it's rising long-term support line, but if we base the same line on daily closing prices, we have no invalidation. The breakout above the declining short-term resistance line is not confirmed at this time. In late November, a similar breakout turned out to be a fake-out and the entire precious metals sector moved sharply lower on the following trading day (this Monday).

Silver moved back to the upper rising long-term resistance line and the psychologically important $20 level without invalidating them. There was an invalidation of the short-term breakdown, but the long-term one is more important.

Mining stocks barely moved and there was practically no improvement in the HUI-to-gold ratio.

This might seem familiar to you - we've already been through a similar situation this year... In the first half of April - before the major plunge in the sector. Back then gold moved higher about 2.6% before starting it's huge decline, while miners continued to underperform. This is more or less how much gold corrected this week as well.

Miners remained below the previously broken medium-term support level (the May 2012 bottom in that case) and we see the same today. The HUI Index remains below the previous 2013 low and even below the psychological level of 200.

The medium-term outlook remains bearish and the short-term outlook is still bearish as well - the USD Index haven't really rallied just yet, and it's very likely to do so in the following days and weeks, which will likely lead to much lower precious metals prices.

We were stopped out of the short trade in silver yesterday, and at this time we will simply keep the remaining positions intact. Effectively, the short position got a bit smaller, but we think it's still worth keeping it. Gold's stop-loss is relatively close - this represents our strategy to close the position if we see more temporary strength, as this would likely mean an even bigger rally and another - better - opportunity to re-enter the short position at higher prices.

To summarize:

Trading – PR: Short position in gold, and mining stocks.

Long-term investments: No positions.

Stop-loss orders for the speculative short position:

• Gold: $1,262
• HUI Index: 214
• GDX ETF: $22.80

As always, we'll keep you - our subscribers - 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) and we will send additional Market Alerts whenever appropriate.

The trading position presented above is a netted one, based on both the subjective signals from your Editor, and the automated tools (SP Indicators and the upcoming self-similarity-based tool). You will find more information by following links in the summary of the latest Premium Update.

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