Silver Price Prediction – Prices Slide as the Dollar Pops Following Fed Meeting

Silver prices moved lower but rebounded from session lows as the dollar rallied and yields rose. Prices are looking toppy but have yet to rollover like gold. Silver prices have been rangebound and have not been able to gain any traction. The decline in copper prices has also weighed on silver prices as both are used in the industrial process. The U.S. 10-year increased 5-basis points while the 2-year yield rose 6-basis points, as the Fed changed its dot plots to show that 7 Fed officials believe rates will increase in 2022 compared to just four officials at the last Federal Reserve meeting. The Fed raised its view of growth and inflation.

Technical analysis

Silver prices slid on Wednesday but rebounded from session lows and remain rangebound. Support is seen near the 50-day moving average at 27.08.  Short-term resistance is seen near the 10-day moving average at 27.73. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The RSI (relative strength index ) also broke down to new lows which reflects accelerating negative momentum. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a declining trajectory which points to lower prices.

The Fed Increases Future Inflation Forecast

The Federal Reserve increased its inflation forecast but left interest rates unchanged as widely expected. However, the central bank did not indicate as to when it will begin cutting back on its aggressive bond-buying program. Officials raised their GDP expectations for this year to 7% from 6.5% previously. The unemployment estimate remained unchanged at 4.5%. The Fed raised its inflation expectation to 3.4%, a full percentage point higher than the March projection.

Silver Price Forecast – Silver Markets Continue Sideways Action

Silver markets have gone back and forth during the course of the trading session on Wednesday as we await the FOMC statement, but quite frankly at this point in time it comes down to whether or not we see more demand picking up, because the currency depreciation of the greenback has probably stretched about as far as it will when it comes to driving this market. That being said, I do think that we still have a lot of upward momentum just waiting to happen, so I do like the idea of buying dips.

SILVER Video 17.06.21

The 50 day EMA is an area of significant support from what I can see, and then of course we have significant support in the region of the $26 level. Underneath there, we have the 200 day EMA and the uptrend line both sitting there as well. In other words, I do not really have a scenario which I am looking to short this market, because quite frankly it is such a bullish market and we have formed a bit of an ascending triangle. If we can break above the top of it, which I see as the $30 level, then the market could go much higher, perhaps reaching towards the $50 level. That is based upon historical precedence, which has happened a couple of times previously.

That being said, the market has a lot of work to do before we get that move, but in the short term I think we are simply looking for some type of catalyst to get to the upside. We have a lot of work to get through, but I think the buyers are still very much in control.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Remains Range-Bound While Traders Wait For Fed Decision

Silver Stays In The Previous Trading Range

Silver is currently trying to get back above $27.75 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is testing the nearest resistance level at the 50 EMA at 90.60. If this test is successful, the U.S. Dollar Index will gain additional upside momentum which will be bearish for silver and gold price today. However, it remains to be seen whether markets are ready for any moves ahead of the Fed Interest Rate Decision.

Gold has recently made an attempt to get below $1850 but failed to develop sufficient downside momentum and moved closer to $1865. The nearest significant resistance level for gold is located at the 20 EMA at $1875. In case gold gets to the test of this level, silver will get more support.

Gold/silver ratio has managed to settle below the 67 level and is trying to get to the test of the support at 66.50. A move below 66.50 will be bullish for silver.

Technical Analysis

silver june 16 2021

Silver continues to trade in the range between the support at $27.50 and the resistance at $28.30, and it looks that it will need additional catalysts to get out of this range.

RSI is in the moderate territory and there is plenty of room to gain momentum, but silver failed to get any momentum in recent weeks.

Currently, silver is trying to get back above $27.75. If this attempt is successful, it will get to the test of the next resistance level which is located at $28.00. A move above this level will push silver towards the resistance at $28.30.

On the support side, a move below the key support level at $27.50 will open the way to the test of the next support which is located at the 50 EMA at $27.20. In case silver manages to get below the 50 EMA, it will head towards the support at $27.00. A move below this level will push silver towards the support at $26.65.

For a look at all of today’s economic events, check out our economic calendar.

Gold: Skis Are On, Time to Choose the Slope

In the skiers’ vernacular, a ski trail is a very easy way down, with a light gradient at full length. It looks like the late-2012 decline in gold. However, there is also a black slope – a steep and dangerous road on which inexperienced skiers can hurt themselves badly; it’s very similar to what happened to gold in 2008 and 2020. While we don’t know yet which way we will choose to go down (as we have probably just reached the top), the nearest FOMC event will most likely shove us towards one of them. Let’s put our helmets on.

The world is holding its breath for today’s comments from the Fed, knowing that one of the approaches would be a game-changer.

If the Fed hints that it’s ready to taper its stimulus, the long-term rates will likely rally, whereas stocks, precious metals and commodities will likely slide. But if they don’t do that, it seems that whatever has been going on in the above markets will likely continue based on their technical developments.

In the case of gold, it means either a measured late-2012-style decline or a more powerful slide similar to the moves we saw in 2008 and 2020. Which one will it be? Either way, the next big move is likely to be to the downside (even if dovish comments were to spur some immediate-term gains). Why? Because history tends to rhyme, and right now, gold is simply repeating its price patterns from the past that were preceded by relatively similar events (invalidation of the breakout to new all-time highs – just like in 2008; similarity with regard to price moves, volume, and key indicators – just like in 2011-2012).

Gold declined once again today, but since it remains between the declining medium-term support line and the rising short-term resistance line, the tug-of-war between bulls and bears remains in place.

The above chart is likely either perplexing, confusing or appearing random for those who haven’t stumbled upon the technical analysis toolkit. But to those who have learned about its principles and have used it themselves, the above chart is very exciting. And to those who took the expertise to the next level and see an even bigger picture, the chart is relatively calm, and normal.

Gold: How Exciting Are Recent Moves?

Why would the above chart be so exciting? Because gold just broke below its rising dashed support line and closed the day below it. This is the first time that it managed to do that, despite coming close to it a few times before. The excitement is even bigger because of what happened on an intraday basis – gold moved back to its declining support line based on the 2020 and 2021 highs and then it moved back up. Consequently, based on the same session, both bulls and bears have an indication that “they were right all along”. Was yesterday’s session a major breakdown, or a confirmation of the May breakout?

But how excited can you get if it’s clear that gold is simply repeating its price patterns from the past that were preceded by relatively similar events (invalidation of breakout to new all-time highs – just like in 2008; similarity with regard to price moves, volume, and key indicators – just like in 2011-2012).

Watching a football match is not as exciting when you already know the outcome, is it?

What’s likely to happen now? Gold is likely to move back and forth, but will ultimately break below the declining support line, which will be a major “uh-oh” moment for those who think that gold will move higher from here based on the very positive fundamental situation. Yes, it is very positive, but it doesn’t mean that gold would rally right away. It could decline despite the fundamentals, just like it did in 2008 and in 2013. And it seems that it’s about to slide.

Back in 2008, gold corrected to 61.8% Fibonacci retracement , but it stopped rallying approximately when the USD Index started to rally, and the general stock market accelerated its decline.

Taking into consideration that the general stock market has probably just topped, and the USD Index is about to rally, then gold is likely to slide for the final time in the following weeks/months. Both above-mentioned markets support this bearish scenario and so do the self-similar patterns in terms of gold price itself.

Moreover, while the pace of gold’s decline in 2012 started off slow, the momentum picked up later on as the drawdown became more vicious. As a result, the tepid pace of gold’s current slide remains deceptive and isn’t a cause for concern.

Please see below:

The relatively broad bottom with higher lows is what preceded both final short-term rallies – the current one, and the 2012 one. Their shape as well as the shape of the decline that preceded these broad bottoms is very similar. In both cases, the preceding decline had some back-and-forth trading in its middle, and the final rally picked up pace after breaking above the initial short-term high.

Interestingly, the 2012 rally ended on huge volume, which is exactly what we saw also on May 19 this year. Consequently , forecasting much higher gold prices here doesn’t seem to be justified based on the historical analogies.

The thing I would like to emphasize here is that gold didn’t form the final top at the huge-volume reversal on Sep. 13, 2012. It moved back and forth for a while and moved a bit above that high-volume top, and only then the final top took place (in early October 2012).

The same happened in September and in October 2008. Gold reversed on huge volume in mid-September, and it was approximately the end of the rally. The final top, however, formed after some back-and-forth trading and a move slightly above the previous high.

Consequently, the fact that gold moved a bit above its own high-volume reversal (May 19, 2021) is not an invalidation of the analogy, but rather its continuation.

The lower part of the above chart shows how the USD Index and the general stock market performed when gold ended its late-2012 rally and was starting its epic decline. In short, that was when the USD Index bottomed, and when the general stock market topped.

Also, please note that while it might seem bullish that gold managed to rally above its declining black resistance line recently (the one based on the 2020 top and the 2021 top), please note that the same happened in 2012 – I marked the analogous line with red. The breakout didn’t prevent gold from sliding. When the price reached the line, we saw a short-term bounce, but nothing more than that – the gold price fell through it in the following weeks. Consequently, if history rhymes, the support provided by the current declining medium-term support line is unlikely to trigger anything more than a short-term bounce. And since we’re already after this event, gold’s next attempt to break below it might be successful.

Having said that, let’s take a look at silver.

Silver’s Failed Attempts to Break Out

Silver price confirmed its breakdown below its rising support line, and it has just finished invalidating its fifth attempt to break above the early January highs. This is a clearly bearish combination, even without taking into account the similarity between now, 2020, and 2008.

Let’s keep in mind that silver might hesitate to decline substantially at first, but then play a huge catch-up close to the end of the decline – just as it did in 2020.

Miners: Breaking Below Support Lines Without USDX Help

The breakdown in the GDX ETF is also crystal clear. Moreover, it’s almost confirmed, as the GDX ETF closed below its rising dashed support line for the second day in a row.

We saw a buy signal from the stochastic indicator, but the breakdown in terms of closing prices is more important, as the buy signals from the stochastic (below 20) were not that reliable so far this year. Please note that the mid-January buy signal was followed by much lower prices in the following weeks. The same was the case with the first buy signal that we saw in late February.

And indeed, the supposedly bullish signal has already been reversed by another sell signal. Thus, the trend remains down and the outlook remains bearish.

The breakdown is also clear in the case of the 4-hour chart featuring the proxy for junior miners – the GDXJ ETF.

On the above chart, we see that the huge-volume rally has once again worked as a sell signal – in the past, it often heralded short-term declines like the current one.

What’s particularly interesting, gold and gold miners have broken decisively below their rising support lines without the USD Index’s help. This is a sign of weakness in the PMs market.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Daily Gold News: Wednesday, June 16 – Markets Await FOMC Announcement

The gold futures contract lost 0.51% on Tuesday, as it remained close to Monday’s low. Gold is extending its month-long consolidation along $1,850-1,900. On June 1 gold price was the highest since early January. In April the market has bounced from the support level marked by March 8 local low of $1,663.30. Since then it has been advancing. This morning gold is trading along yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.2% lower. What about the other precious metals? Silver is 0.2% higher, platinum is 0.7% lower and palladium is 0.5% higher today. So precious metals are mixed this morning.

Yesterday’s Retail Sales release has been worse than expected at -1.3%. The PPI release has been higher than expected at +0.8%.

The markets will be waiting for today’s FOMC Statement announcement at 2:00 p.m. and the Press Conference at 2:30 p.m. We will also have Building Permits and Housing Starts releases this morning.

Where would the price of gold go following today’s news release? We’ve compiled the data since January of 2017, a 51-month-long period of time that contains of thirty five FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. We can see that the biggest 10-day advance after the FOMC day was +10.5% after March 15, 2020 release and the biggest decline was -7.2% after March 3, 2020 release. But we’ve had an increased volatility following coronavirus fear then.

The latest FOMC Statement release came out on April 28. Gold price was 2.8% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 35 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.64% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, June 16

  • 8:30 a.m. U.S. – Building Permits, Housing Starts, Import Prices m/m
  • 8:30 a.m. Canada – CPI m/m
  • 2:00 p.m. U.S. – FOMC Statement, FOMC Economic Projections, Federal Funds Rate
  • 2:30 a.m. U.S. – FOMC Press Conference
  • 6:30 p.m. Canada – BOC Governor Macklem Speech
  • 9:30 p.m. Australia – Employment Change, Unemployment Rate

Thursday, June 17

  • 8:30 a.m. U.S. – Unemployment Claims, Philly Fed Manufacturing Index
  • Tentative, Japan – Monetary Policy Statement, BOJ Policy Rate

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

What’s Next For Gold Prices As Fed Decision Looms?

Last week, the Consumer Price Index, which the Fed uses as its preferred measure of Inflation, jumped a sizzling 5% in May from a year earlier – to its highest level since 2008. Meanwhile, annual core CPI rose 3.8% year over year, which is its sharpest increase since 1992.

The inflation reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the global financial crisis sent the U.S. spiralling into the worst recession since the Great Depression – and Oil prices skyrocketing to $150 a barrel.

There’s no doubt that the Fed is in a tough position. On the one hand, higher inflation calls for the tapering of its historic quantitative easing program. However, on the other hand, the unemployment rate does not warrant a change in the monetary policy stance.

To taper or not to taper – that is the big question facing the Fed and Wednesday’s decision will inevitably set the stage for how precious metals and commodity prices will trade throughout the rest of this month.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Prediction – Prices Slip Ahead of Key Fed Meeting

Silver prices continue to chop sideways ahead of the Federal Reserve decision on Wednesday. The Fed started a two day meeting, which follows the U.S. retail sales report and producer price report.  PPI was much stronger than expected and shows that inflation is accelerating. Jay Powell’s commentary should describe this information and let the markets know they are tracking this closely. The dollar and U.S. yields moved sideways while gold prices moved higher which weighed on the precious metals complex.

Technical Analysis

Silver prices are chopping around but the Fed’s decision will likely be an impetus for a sharp move. Resistance is seen near a downward sloping trend line that comes in near $28.35. Support is seen near the 50-day moving average at 26.96The fast stochastic is chopping around between buying and sell signals which also reflects consolidation. The MACD index generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in negative territory with a declining trajectory which points to lower prices.

Producer Prices Surge

Producer prices rose at their fastest annual clip in nearly 11 years in May. The 6.6% surge in the PPI index was the biggest 12-month rise on record. On a monthly basis, the producer price index rose 0.8%, more than the estimate of 0.5%. Goods inflation continued to be the dominant inflation force, rising 1.5% as opposed to a 0.6% increase in services. Excluding food and energy, PPI rose 5.3%, which also was the biggest increase on record.

Silver Price Forecast – Silver Continues Same Consolidation

Silver market participants have been somewhat relaxed as the market has simply gone back and forth between the $27.50 level and the $28.50 level. At this point, the market is likely to continue the same behavior, due to the fact that the Federal Reserve meeting runs through the end of Wednesday, and therefore I think it is very difficult to imagine a scenario where silver makes a big move without getting an idea of what happens in the Federal Reserve meeting. The statement will be closely parsed, as it can give an idea as to what the Federal Reserve thinks about inflation.

SILVER Video 16.06.21

The 50 day EMA underneath continues offer support as well, so I do think that it is possible that traders will continue to see that as an area to pay attention to. To the upside, the $30 level is a massive resistance barrier, and I think given enough time we will more than likely try to reach above there, and if we can break above the $30 level and allows for the market to go looking towards the $50 level. That being said, it is a longer-term call for that type of break out, and it would also be based upon massive stimulus coming out of the Federal Reserve still.

All things been equal, I believe that the next 24 hours will be choppy and show the same type of behavior that we had seen over the last several weeks, as we do not have any reason to go forward or backward as we have no idea of where things are going to end up and confusion seems to reign.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Support At $27.50 In Sight

Silver Is Under Pressure

Silver has recently made an attempt to get to the test of the major support at $27.50 while the U.S. dollar remained flat against a broad basket of currencies.

The 50 EMA at 90.60 remains a key resistance level for the U.S. Dollar Index. The U.S. Dollar Index has already made several attempts to settle above this level in recent trading sessions but failed to develop sufficient upside momentum. If the U.S. Dollar Index gets above this level, it will head towards 90.90 which will be bearish for silver and gold price today.

Meanwhile, gold is trying to settle back above $1865. If this attempt is successful, gold will move towards the 20 EMA at $1875 which will be bullish for silver.

Gold/silver ratio made an attempt to settle above 67.50. In case gold/silver ratio manages to settle above this level, it will head towards the 20 EMA at 67.70 which will be bearish for silver.

Technical Analysis

silver june 15 2021

Silver is currently moving towards the key support level at $27.50. Silver made many attempts to settle below this level in recent weeks, but this support remained strong.

In case silver manages to settle below $27.50, it will gain additional downside momentum and head towards the support at the 50 EMA at $27.20. RSI is in the moderate territory, and there is plenty of room to gain downside momentum in case the right catalysts emerge.

If silver settles below the 50 EMA at $27.20, it will head towards the next support at $27.00. A successful test of this level will push silver towards the support at $26.65.

On the upside, silver needs to settle above the resistance at $27.75 to have a chance to develop upside momentum in the near term. If silver gets above this level, it will move towards the next resistance which has recently emerged at $28.00. A move above the resistance at $28.00 will open the way to the test of the resistance at $28.30.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Monday, June 15 – Gold’s Further Consolidation, Retail Sales Data in Focus

The gold futures contract lost 0.73% on Monday, as it extended its Friday’s decline. However, gold remained within an almost month-long consolidation along $1,850-1,900. On June 1 gold price was the highest since early January. In April the market has bounced from the support level marked by March 8 local low of $1,663.30. Since then it has been advancing. This morning gold is trading along yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.1% lower. What about the other precious metals? Silver is 0.8% lower, platinum is 0.6% lower and palladium is 0.3% higher today. So precious metals are mixed this morning.

There will be Retail Sales release this morning at 8:30 a.m. We will also get the Producer Price Index number.

The markets will be waiting for tomorrow’s FOMC Statement announcement.

Where would the price of gold go following that news release? We’ve compiled the data since January of 2017, a 51-month-long period of time that contains of thirty five FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. We can see that the biggest 10-day advance after the FOMC day was +10.5% after March 15, 2020 release and the biggest decline was -7.2% after March 3, 2020 release. But we’ve had an increased volatility following coronavirus fear then.

The latest FOMC Statement release came out on April 28. Gold price was 2.8% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 35 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.64% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Tuesday, June 15

  • 8:30 a.m. U.S. – Retail Sales m/m, Core Retail Sales m/m, PPI m/m, Core PPI m/m, Empire State Manufacturing Index
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Business Inventories m/m, NAHB Housing Market Index

Wednesday, June 16

  • 8:30 a.m. U.S. – Building Permits, Housing Starts, Import Prices m/m
  • 8:30 a.m. Canada – CPI m/m
  • 2:00 p.m. U.S. – FOMC Statement, FOMC Economic Projections, Federal Funds Rate
  • 2:30 a.m. U.S. – FOMC Press Conference
  • 6:30 p.m. Canada – BOC Governor Macklem Speech
  • 9:30 p.m. Australia – Employment Change, Unemployment Rate

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver is Potentially Bullish

27.50-60 is the zone where we should see the bounce. Targets are 27.99 and 28.40. The structure looks bullish and bears could be stronger only if the price breaks below 27.28. At this point we should see a bounce and bulls could be in profit by the end of the day. Watch for the FOMC tomorrow.

For a look at all of today’s economic events, check out our economic calendar.

Cheers and safe trading,

Nenad

 

Silver Price Prediction – Prices Consolidate Ahead of the Fed

Silver prices moved sideways on Monday but continued to gain traction against gold. The Federal Reserve meets mid-week, and their views on inflation will help provide the next direction for the precious metals complex. Copper prices have also been rangebound, and traders are awaiting Jay Powell’s commentary to determine a future upside to materials.  On Monday, the dollar moved sideways, neutral for silver prices, while U.S. Treasuries moved higher, which generated headwinds. Hedge funds reduced both long and short positions in futures and options according to the most recent commitment of traders report.

Technical Analysis

Silver prices are consolidating building energy and waiting for an impetus from the Federal Reserve. Resistance is seen near a downward sloping trend line that comes in near $28.35. Support is seen near the 50-day moving average at 26.91. Most of the price action is centering around the 10-day moving average as volatility has eased. The fast stochastic is chopping around between buying and sell signals which also reflects consolidation. The MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory reflecting consolidation.

Commitment of Trader’s Analysis

Traders reduced both long and short positions in futures and options ahead of the Fed’s meeting this week. It’s hard to see prices moving higher or lower ahead of the Fed decision. Hedge funds remain long, with the open interest nearly 2.5-times higher for long positions than for short positions.  Hedge funds are betting that prices will move higher, which shows that sentiment is positive. If the Fed does not refer to inflation in their statement and does not provide a timeline for reducing bond purchases, the dollar is likely to tumble and silver prices should rally.

Silver Price Forecast – Silver Markets Find Buyers Again

Silver markets have initially fallen during the course of the trading session on Monday, reaching down towards the $2.50 level. The $2.50 level is an area where we see a lot of support, based upon the previous action. The hammer that formed for the day does suggest that we are ready to go higher, perhaps reaching towards the $29 level, which is an area that is resistive, and most certainly the $30 level will be. If we can break above the $30 level, then it would be a massive sign that we are going to go much higher. At this point, the market would probably go looking towards the $50 level, based upon historical precedence.

SILVER Video 15.06.21

To the downside, markets continue to see the 50 day EMA as important, as we have seen the market bounce from it a couple of times in the past. All things been equal, the market is still very much in an uptrend, but we continue to see a lot of resistance above. This is essentially a “squeeze play” that will play out rather soon. Pay close attention to the US dollar, because if it starts to fall apart then that could be another reason for this market to go to the upside.

When you look at the chart, there is a huge ascending triangle that has been constraining this market, and sooner or later we will have to make some type of decision. Because of this, I think what we are seeing is a scenario where we are building up for the next big move, but until then you are going to have to be very cautious.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Key Support At $27.50 Stays Strong

Silver Continues To Trade In The $27.50- $28.30 Range

Silver has recently made another attempt to settle below the key support level at $27.50 but failed to develop sufficient downside momentum and rebounded closer to the resistance at $28.00 while the U.S. dollar declined against a broad basket of currencies.

The U.S. Dollar Index made an attempt to settle above the 50 EMA at 90.60 but lost momentum and pulled back below the support at 90.50. The next material support level for the U.S. Dollar Index is located at 90.30. A move below this level will open the way to the test of the 20 EMA at 90.20 which will be bullish for silver and gold price today.

Gold settled below the 20 EMA at $1875 and tried to get to the test of the 50 EMA at $1840. Gold received material support near the 50 EMA and rebounded towards $1865, but the recent sell-off looks worrisome for gold and silver bulls.

Meanwhile, gold/silver ratio managed to get below the 67 level and is moving towards the support at 66.50 which is bullish for silver.

Technical Analysis

silver june 14 2021

Silver failed to settle below the support at $27.50 and rebounded towards the resistance at $28.00. In case silver manages to settle above this level, it will head towards the next resistance which is located at the high of the current trading range at $28.30. A successful test of the resistance at $28.30 will push silver towards the next resistance at $28.90.

On the support side, silver needs to get below the 20 EMA at $27.70 to have a chance to get to another test of the major support level at $27.50. This support level has already been tested many times and proved its strength.

In case silver settles below the support at $27.50, it will move towards the next support at the 50 EMA at $27.15. A move below the 50 EMA will open the way to the test of the support at $27.00.

For a look at all of today’s economic events, check out our economic calendar.

USDX: The Cleanest Shirt Among the Dirty Laundry

The USD Index (USDX)

With the USD Index washing away its sins in recent weeks, the greenback has recorded five daily rallies of more than 0.40% since May 26. And with the up days growing stronger and the down days growing weaker, the change in the trend will be clear to more and more traders, which eventually would likely cause a shift in the sentiment. Case in point: while gold, silver and mining stocks are looking forward to their summer vacations (deep dives seem to be in the vacation plans, especially given today’s pre-market ~$20 decline in gold) , the USD Index has been hard at work rehabbing its reputation. And with the U.S. dollar easily the cleanest shirt among the currency basket of dirty laundry, the smell of fresh linen has begun to pique investors’ interest.

For one, not only are the USD Index’s fundamentals trending up, but the technicals are also moving in the same direction. And after the USD Index closed visibly above its previous weekly close, the greenback’s verified breakout above its declining resistance line remains a source of optimism. Moreover, while the USD Index still remains below its dashed rising resistance line and its 50-day moving average, subtle signs signal that the dollar is slowly cleaning up its act.

Please see below:

Second, while the USD Index’s rally occurred slowly at first in 2016, the momentum gathered steam as sentiment shifted. And while we’re only in the first stage of the two-stage process, it’s important to remember that investors are forward-looking.

Third, the USD Index recently bounced off of a triple (declining) bottom and prior instances were followed by significant rallies (the identical patterns formed in mid-and-late 2020 and are marked by the shaded green boxes above). During that time, the USD Index originally declined steadily before zigzag corrections culminated with new lows. However, with the third time being a charm, the third distinctive bottom was the final one.

For context, the USDX sunk like a stone in July 2020, before moving back and forth while still declining in August. Similarly, in November 2020, the USDX fell from grace once again (there was one exception) before moving back and forth while still declining in December. More importantly, though, ever since the final days of March, we’ve seen the same thing all over again. After the USD Index lost its confidence in April, we saw back-and-forth movement with lower lows and lower highs in May. However, with the third distinctive low likely already achieved, the USD Index’s best days may lie ahead.

Head & Shoulders Patterns Ahead

And what happened to gold, silver and mining stocks in the time of the two previous analogues?

Well, in August, gold topped without waiting for USD’s final bottom – which is natural, given how extremely overbought it was at the time. Likewise, in early January gold topped (which was much more similar to the current situation given the preceding price action) when the USDX formed its third and final distinctive bottom.

In addition, while the development is more of a wildcard at the moment, the USD Index might be in the early innings of forming an inverted head & shoulders pattern. For context, an inverted H&S pattern is a bullish development that if formed, could usher the USD Index to about 97-98. However, completing the right shoulder requires an upward breach of 93 (the blue line on the chart above), so at this point, it’s more of an indication than a confirmation.

However, if we turn the pattern upside down, the Euro Index might be in the midst of forming a bearish H&S pattern . If you analyze the right side of the chart below, you can see that the symmetrical pattern has the current price action mirroring the summer of 2020. And while we’re still in the early innings of forming the right shoulder, three peaks were recorded during the second half of 2020 before the Euro Index eventually rolled over.

Likewise, with a symmetrical setup that seems to already be in motion, the Euro Index may be heading down a similar path of historical ruin. In the second half of 2020, the decline was not that big, but it’s no wonder that this was the case as that was only the left shoulder of the pattern. Completion of the right shoulder, however, would imply another move lower, at least equal to the size of the head – to about the June 2020 lows or lower.

Please see below:

Moreover, with the USD Index’s triple bottom mirrored by a likely triple top in the Euro Index , last week’s decline actually ushered the Euro Index materially below the dashed resistance line of its monthly channel. And with the price action mirroring what we witnessed in mid-to-late 2020 – right before the Euro Index plunged – investors’ confidence could soon turn into fear.

Furthermore, the completion of the masterpiece could have a profound impact on gold, silver and mining stocks. To explain, gold continues to underperform the euro. If you analyze the bottom half of the chart above, you can see that material upswings in the Euro Index have resulted in diminishing marginal returns for the yellow metal. Thus, the relative weakness is an ominous sign, and if the Euro Index reverses, it could weigh heavily on the precious metals over the medium term. That’s another point for the bearish price prediction for gold.

The 2016 Analogue

Also, foretelling another revival, the USD Index has hopped into the time machine and set the dial to 2016. With the flashback scrubbing the stains off of the USD Index’s 2016 downswing, Mr. Clean could be arriving at just the right time.

As you can see on the above chart, what we saw this year is quite similar to what happened in 2016. If the analogy continues, the back-and-forth trading is likely to be followed by an upward acceleration. The trigger for it could be the rally back above the 50-day moving average and the rising dashed line. The confirmed breakout above both in 2016 resulted in sharper rallies in the USDX and much lower gold prices (gold declined about $200 between early October 2016 and its December 2016 lows).

Finally, the USD Index’s long-term breakout also remains intact . And when we steady the binoculars and observe the currency landscape, the greenback’s recent weakness is largely inconsequential.

Also, please note that the correlation between the USD Index and gold is now strongly negative (-0.93 over the last 10 days). The same thing happened in early January 2021 and in late July – August 2020; these were major tops in gold.

The bottom line?

Once the momentum unfolds , ~94.5 is likely the USD Index’s first stop. In the months to follow, the USDX will likely exceed 100 at some point over the medium or long term. Keep in mind though: we’re not bullish on the greenback because of the U.S.’ absolute outperformance. It’s because the region is outperforming the Eurozone and the EUR/USD accounts for nearly 58% of the movement of the USD Index – the relative performance is what really matters .

In conclusion, investors are well aware of the USD Index’s dirty laundry, and the euro’s squeaky-clean image is starting to show stains. Moreover, with the U.S. Federal Reserve (FED) poised to come clean and scale back its asset purchases in September, the USD Index should shine over the medium term. More importantly, though, with gold, silver and mining stocks exhibiting strong negative relationships with the U.S. dollar, the greenback’s eventual shower could send all of the precious metals’ gains down the drain.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Stocks Mixed At The Beginning Of The Week

Traders Wait For Additional Catalysts

S&P 500 futures are mostly flat in premarket trading as traders wait for key catalysts that will be released later this week.

There are no important economic reports scheduled to be released today, and traders will have to wait until Tuesday to see the important Retail Sales data for May. Analysts expect that Retail Sales declined by 0.7% on a month-over-month basis.

Traders will also have a chance to take a look at Producer Prices data for May. Producer Prices are expected to grow by 6.3% year-over-year in May, but it remains to be seen whether the market will be impressed by these numbers since it has successfully ignored the recent increase of Inflation Rate.

On Wednesday, market’s focus will shift to Fed Interest Rate Decision and the subsequent commentary. This Fed meeting is especially important since the Fed will release FOMC Economic Projections which will likely have a material impact on markets.

WTI Oil Is Moving Towards The $72 Level

WTI oil continues to move higher as traders remain focused on the rebound of oil demand. The recent data from U.S. airlines suggests that demand continues to rise which is bullish for oil.

Interestingly, energy-related stocks failed to gain sufficient upside momentum in recent trading sessions, but the continuation of oil rally will likely push them to higher levels.

Precious Metals Decline At The Start Of The Week

Gold declined below the 20 EMA at $1875 and gained strong downside momentum. Currently, it is trying to get to the test of the 50 EMA which is located at $1840. Silver also found itself under significant pressure and is testing the major support level at $27.50.

It looks that precious metals traders were surprised by the recent strength of the U.S. dollar. U.S. dollar is flat against a broad basket of currencies today, but the U.S. Dollar Index has recently failed to settle below the psychologically important support level at 90 which served as a material bearish catalyst for gold and silver. In this light, gold mining stocks and silver mining stocks will find themselves under pressure at the start of the week.

For a look at all of today’s economic events, check out our economic calendar.

All Eyes Turn To Fed As Inflation Runs Hot – What’s Next?

Last week, the Consumer Price Index, jumped a sizzling 5% in May from a year earlier – to its highest level since 2008. Meanwhile, core CPI rose 3.8% year over year, which is its sharpest increase since 1992.

The inflation reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the global financial crisis sent the U.S. spiralling into the worst recession since the Great Depression – and Oil prices skyrocketing to $150 a barrel.

The hot reading now positions, the Federal Reserve’s June meeting is the big event for markets in the week ahead.

So far this year, the Fed has remained amendment that inflation will run hotter than its traditional 2% goal for a longer period than estimated as the global economy reopens, but should be transitory. Focus now shifted to the Fed’s June 15-16 meeting for further clarity on policymakers’ view on rising inflation and monetary policy going forward.

One of the key indicators of rising inflation – is higher oil prices. On Monday, Oil prices rallied to a 32-month high – putting them firmly on course for their biggest quarterly advance since 2010.

Elsewhere, many other commodities ranging from Copper, Palladium, Iron Ore to Lumber prices surged past all-time record highs in recent weeks – And this could just be the beginning!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Monday, June 14 – Gold Dropping to Recent Low

The gold futures contract lost 0.89% on Friday, as it extended its short-term consolidation following the rebound from around $1,850. On June 1 gold price was the highest since early January. In April the market has bounced from the support level marked by March 8 local low of $1,663.30. Since then it has been advancing. This morning gold is trading at its previous local low, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 1.3% lower, as it is extending Friday’s decline. What about the other precious metals? Silver is 0.8% lower, platinum is 0.2% higher and palladium is 0.5% lower today. So precious metals are lower this morning.

Friday’s Preliminary UoM Consumer Sentiment release has been better than expected at 86.4. Today we won’t get any new important economic data announcements. The markets will be waiting for tomorrow’s Retail Sales release and the important Wednesday’s FOMC Statement release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, June 14

  • No important economic data releases

Tuesday, June 15

  • 8:30 a.m. U.S. – Retail Sales m/m, Core Retail Sales m/m, PPI m/m, Core PPI m/m, Empire State Manufacturing Index
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Business Inventories m/m, NAHB Housing Market Index

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Gold Goin’ Red Ahead of the Fed

As prior penned in “Gold’s June Swoon”, the technical and seasonal case was laid out for Gold to settle June “nearer to 1800” than to 1900. Thus far, that is the trend, albeit with 13 trading days remaining in June. And the Big One is this Wednesday (16 June) when the “FOMC-11” (Mmes Bowman, Brainard, Daly and Messrs Barkin, Bostic, Clarida, Evans, Powell, Quarles, Waller and Williams) vote to either maintain their Bank’s FedFunds target range at 0.00%-0.25% … else bump it up to 0.25%-0.50% … perhaps spiced with a bit of purchased paper taper.

This is the most important Federal Open Market Committee vote in better than a year (since 16 March 2020) when COVID convinced ’em to cut the rate down to the present target range. Further, Wednesday’s Policy Statement — should it incorporate a hike in the rate — is a key fundamental and uplifting case (given currency debasement otherwise being ignored) that can get Gold back onto a positive track into month’s end.

For as you regular readers know: Gold has proven to have done well when the short end of the yield curve actually rises; (recall the FedFunds rate and the price of Gold increasing together through the three-year stint from 2004-2006). Otherwise should the FOMC sit tight as they see, we ‘spect Gold’s “nearer to 1800” scenario shall be what we’ll see.

To be sure, the Fed now sits upon “A Delicate Balance”–[Marian McPartland, ’66]. In recent missives we’ve derogatorily referred to the Fed as being “scared s**tless” toward (finally) upsetting the outrageously overvalued stock market by merely increasing the cost of money. The last thing the Fed wants to do given the economy having recovered from COVID is to crash the now all-time high S&P 500 (4247), for which at this writing our “live” price/earnings ratio is 53.3x, with Bob Shiller’s non-cyclically-adjusted version not far behind at 45.1x.

Already for months, the yield on the riskfull S&P (now 1.375%) has trailed that of the riskless 10-Year U.S. Treasury Note (now 1.462%), let alone that of the 30-Year U.S. Treasury Bond (now 2.152%).

“But Gold itself has no yield, mmb…”

The perfect “leading statement” there, Squire. For if one defines “yield” as that rate of return to be realized upon Gold reaching up to our opening Scoreboard’s present valuation of 3861 (i.e. its “par value”), given price having actually settled yesterday (Friday) at 1880, that’s a 105.372% “yield”.

Indeed “To raise, or not to raise, [perchance to taper] that is the question: whether ’tis nobler in the mind to suffer the slings and arrows of outrageous debasement, or to take Gold against a sea of troubles, and by opposing, end them.” (Way to ad lib the Bard’s 1600 script there, Hamlet, back at a time when Gold was — as ’tis today — a currency).

To be sure, higher Dollar interest rates bring attraction to the Buck. And yet contra to conventional wisdom — given Gold plays no currency favourites — its price can rise right in stride with the so-called oxymoron “Dollar strength”, (recall for example their multi-month ascensions together in both 2010 and 2014).

Regardless of whether the FOMC votes to raise or not to raise or taper for a phase, we have to think this time ’round there shall be dissent amongst the ranks rather than the usual unanimous “voting for the monetary policy action were” … some may stand pat, some may vote taper, some may say hike. On verra.

Either way, here is the present state of Gold’s weekly bars from one year ago-to-date, the prior “outside week” having now been followed up with an “inside week”, (i.e. a “lower high” and “higher low”) as price continues red ahead of the Fed:

And for those of you thinking (perhaps skeptically) ahead, were Gold to settle June at, say 1800, might it still muster a 33% increase to reach our forecast 2401 high by year-end? It did such six-month stints in 2006, 2008 and 2011. Sprinkle in too the stagflation and stand by…

Meanwhile we continue to wonder how long ’twill be before the COVID-recovered economy next keels over. Confiscatory tax increases provenly are the killer regardless of how “compassionately” they’re couched. Most folks figure that out upon being laid off. The StateSide the capital gains tax is going up as is tax on corporations. And now, let’s add on to that a “G-7” global minimum tax. “Sorry, Chuck, we know you’re set for retirement and a pension next year, but we now have to instead divert that dough into some foreign thing.” Have a great day.

As comprehensively demonstrated throughout history, such tax increases are ultimately paid for by the elimination of jobs, without which the consumer still has to pay their tax bill on whatever they nonetheless earned. “Here we go again!” And here’s the Economic Barometer, for which 16 incoming metrics are due in the week ahead, not to mention the Fed (!):

Elsewhere, given the economically-weaker EuroZone, the European Central Bank is maintaining their stimulus policy, even as they’re a bit more upbeat in their outlook. Then over in China, ’tis said their producer prices are inflating more than they have in a dozen years. (And is COVID coming back in southern China? “Uhh boy…”)

Now let’s turn to the precious metals specifically from three months ago-to-date by their daily bars for Gold on the left and for Silver on the right. Notably for the yellow metal, its baby blue dots continue to cascade as the current price uptrend further loses its consistency, whereas price for the white metal is attempting to defy same. But as you regular readers well know, ’tis the “Baby Blues” which generally will out:

Then in looking at their 10-day Market Profiles, Gold (below left) has succumbed below its key 1895 trading resistor, whilst Silver (below right) is treading water above its 27.90 supporter. “Sink or swim, Sister Silver?”:

And thus here is how Gold stacks up at present:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3861
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
2021’s High: 1963 (06 January)
The Gateway to 2000: 1900+
Trading Resistance: 1895 / 1902 / 1908
10-Session “volume-weighted” average price magnet: 1894
Gold Currently: 1880, (expected daily trading range [“EDTR”]: 25 points)
Trading Support: 1873
10-Session directional range: down to 1856 (from 1919) = -63 points or -3.3%
The 300-Day Moving Average: 1829 and rising
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
The Weekly Parabolic Price to flip Short: 1750
On Maneuvers: 1750-1579
2021’s Low: 1673 (08 March)
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

Toward closing, we’re more stock market wary than ever. You already know of the beyond-belief level of the S&P’s P/E, and that its MoneyFlow is hardly supportive of the Index’s unsustainably high level in extremely thin trading conditions, (which for you WestPalmBeachers down there is like mowing your lawn pretending there’s gasoline in the empty tank). Indeed from our “You Won’t Find This Anywhere Else Dept.” today you personally (in a trading vacuum) can move the S&P 500 Index one full point with just 63% of the amount of money needed to so do just back on 08 April.

And if that doesn’t make the point of the market being thin, try this statistic: yesterday’s (11 June) total share volume traded for all of the S&P 500 constituents was 1.7 billion shares. The volume one year earlier to the day was 4.0 billion shares, well double that of today. Then on top of it all, this display popped up during our end-of-day data run on Friday night, (the “Spoo” is the S&P 500 futures contract):

And finally from the “Last to Figure It Out Dept.” this past week Deutsche Bank expressed concern over inflation as a global “time bomb”. (Nothing like realizing the obvious a year after everyone else). At least you realize that having some Gold is obvious!

Cheers! (And mind that Fed!)

The Gold Update by Mark Mead Baillie — 604th Edition — Monte-Carlo —

www.deMeadville.com
www.TheGoldUpdate.com

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Prediction – Large Option Open Interest Should Draw Prices Higher

Silver prices edged lower on Friday, declining by 0.25%, but settled up about 0.45% for the week. The surge in the dollar on Friday generated headwinds for silver and the entire precious metals complex. With yields not impressed with higher inflation levels, lower yields are likely to weigh on the dollar and eventually buoying silver prices. The daily charts show that prices are consolidating between a tight range. Traders await the next commitment of trader’s report, but open interest is still likely to show a significant number of long contracts held in the managed money category. There is large option open interest (which is the number of open option contracts, at the $26 strike options that settle in one week and the $26 and $27 strike that mature in 2-weeks. If the markets can push the price another 4% it should begin to see additional short-covering.

Technical Analysis

The weekly chart shows that prices moved higher and continued a long-term bull flag pattern that is a pause that eventually refreshes higher. Resistance is seen near a downward sloping trend line on the weekly chart at $28.45. Support is seen near the 10-week moving average at 26.92. Short-term momentum is positive as the fast stochastic made a crossover buy signal. The caveat is that the fast stochastic is printing a reading of 83, above the overbought trigger level of 80, which could foreshadow a correction.

Medium-term momentum is also positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line. The MACD histogram is printing in positive territory with an upward sloping trajectory which points to higher prices.