Gold is testing an important resistance level, and we should soon know if prices bottomed. Silver is struggling around the $16.18 level, but prices are holding above the 10-day EMA. GDX is at resistance and prices could breakout or decline from here. Junior miners look sturdy and retain the most potential if prices indeed bottomed.
Trump’s tax bill passed the House and moved on to the Senate. They should vote on it tonight or tomorrow; it is expected to pass. How gold reacts after the passing of the tax bill will determine if prices bottomed last week or if we will see one final decline into January?
The stock market has rallied for 13-months. Much of the advance was in anticipation of favorable corporate tax reductions. The proposed tax bill would reduce corporate taxes from 35% to 21%. I wonder how much of this is already priced into the market? Hard to say, but sometimes the market likes to buy the rumor and sell the news. A selloff in stocks would probably push gold up through its resistance.
-US DOLLAR- The dollar is close to breaking the intermediate trendline. Closing below last Thursday’s 92.86 low would be bearish and support a bottom for gold.
-GOLD- Prices touched the critical resistance line and backed off slightly. We will either see a breakout above $1,268-$1,270, or prices will begin to rollover from here. How markets react to the tax bill will decide.
-SILVER- Prices are struggling around the $16.18 level. Nevertheless, there have been two white candle closes above the 10-day EMA, indicating a potential bottom. I’m eager to enter positions, but I’d like to see just a little more confirmation before jumping in.
-GDX- Prices are at significant resistance. Closing above $22.26 would imply a breakout. However, dropping below $21.75 would indicate a possible breakdown.
-HUI- Another decline is possible as long as the HUI remains below 185.19. Closing above that level would refute the potential for a fourth and final step lower.
-GDXJ- Juniors are outperforming metals and GDX. Prices are above the prior breakdown and are now testing the 50-day EMA. The unyielding strength argues strongly for a bottom. However, I’d like to see Gold and GDX break above resistance before committing to a position.
-XAU JUNIOR MINING INDEX- The XAU opened a price gap yesterday. A bottom is likely as long as prices don’t close below 80.50. Closing below 80.50 and sinking back below the 50-day EMA would indicate a price reversal.
-SPY- Prices gapped higher yesterday but sank to fill the gap today. The proposed tax bill would reduce corporate taxes from 35% to 21%. That would be good for business. However, this may be a “buy the rumor and sell the news” type event. Closing below 265 would indicate a possible top.
-WTIC- Prices have been consolidating for a month. Oil would have to close above $58.00 to spark a rally to $60.00-$62.00. Dropping below the red trendline will confirm a top and send prices lower into January/February. I think the standstill will be resolved sooner than later.
Expect another update or two tomorrow. If prices break through resistance, I’ll alert members.