The GLD ETF moved higher on relatively low volume yesterday, one of the weakest days volume-wise in the past several weeks. Moves higher on low volume were recently seen right before big daily declines: Nov. 6, Nov. 15, Nov. 19, and Nov. 29.

From the non-USD perspective, there was no significant move. Gold priced in the Euro remains below the previously-broken 2013 low.

Silver closed the week below the long-term rising support line based on weekly closing prices (meaning that there indeed was a breakdown and only a pullback after it). Yesterday's small move up didn't change anything here.

There was no invalidation of the breakdown below the critical support/resistance levels in case of the HUI and XAU indices, so the outlook remains bearish also from this perspective.

The Euro Index moved higher and closed at 137.40 - it's long-term resistance is just a little higher, at 138 (declining support based on the 2008 and 2011 highs measured by weekly closing prices), so even if the rally is not over yet, it's likely to be over very soon. The Euro Index is once again at the rising medium-term support line (the support is higher than it was last week), so the rally might be over even though the long-term resistance line hasn't been reached yet.

The USD Index moved to the medium-term rising support line once again (the one based on 2012 and 2013 lows), without breaking it and another move up seems to be just around the corner.

Consequently, overall, the outlook for the precious metals sector remains unchanged, and bearish. We think that there is a good possibility (75% or so) that we will see at least a $100 decline in gold before we see a rally to new highs.

In our view, two most probable triggers for such a decline would be: a rally in the USD Index, fake news about the "possibility" of QE tapering, or both. The key point here is the fact that we are expecting to a trigger relatively soon - the medium-term trend remains down, so the big surprise will likely be do the downside regardless of what triggers it.

We might see a bounce when gold reaches its previous 2013 low, so we suggest closing the speculative short positions in both gold and mining stocks when gold moves close to this level (at $1,190). We do not suggest making adjustments to the long-term investment capital when that happens.

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 the netted version of positions based on 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