Metals and Miners are inching their way higher. It will take time to determine if this is just an ordinary rebound lasting 1-2 weeks or the start of a more meaningful advance. If you didn’t get a chance, check out the 2016/2018 gold correlation chart.
Prices reached their lows 3-trading days ago; we are yet to see significant buying interest. Not unusual after a precipitous decline. However, to support more upside, we need a high volume confirmation day in miners (3%+). Typically, these events occur within 4-10 trading days after a significant low. Accordingly, I’d like to see one between now and next Wednesday.
The dollar finished lower for the fourth consecutive day, and we have (at least) a short-term cycle top. I’m a little surprised gold didn’t rally more as the dollar finished 0.68% lower.
Potential Triggers – Gold needs something to trigger active buying, or the rally will begin to fade. Tomorrow’s Fed minutes may do the trick. However, the likelier option is Jerome Powell’s Jackson Hole speech on Friday (10:00 AM). Especially if he discusses potential trouble spots for the US economy and how the central bank might react. I think any hit of easing or backing down on rate increases would give gold the boost it needs. Of course, his comments could have a negative impact on gold as well.
-US DOLLAR- The dollar appears to be declining into a cycle low, and we may have a failed breakout. Prices are back in the previous consolidation zone. The next cycle low is due to arrive in late August to early September.
-GOLD- Prices finished at $1200 and the 10-day EMA. Progressive white candle closes above the 10-day will support a cycle low. However, gold would have to close progressively above the failed cycle low near $1240 to prompt a deeper run to $1300+.
-SILVER- To secure a double bottom at $14.31 silver needs to close above the $15.30 breakdown level and then close progressively above $16.30 in the coming weeks/months.
-GDX- Miners are edging slightly higher, investors are timid- understandably. There is stiff gap resistance at $19.77 and $20.56. Prices would have to close progressively above each of these levels to support a significant bottom. Gold and Miners need a spark to move sharply higher. Perhaps tomorrow’s Fed minutes or Friday’s Jackson Hole speech (Powell) will give them the boost they require.
-GDXJ- We need to see a sharp up day (3%+) within the next week or so to promote a low at $26.78. Juniors would have to close progressively above $29.34 and then $30.60 to neutralize the bearish calls.
-JNUG- The chart is overall bearish. Prices are below all of the moving averages. JNUG would have to close above $9.66 and ultimately $11.01 to neutralize the bearish momentum. Then, prices would have to work their way back above the 200-day MA and stay above it to restore the bullish potential.
-USLV- Resistance in USLV arrives at $7.75 and $9.75. It would take consecutive closes above the 200-day MA to promote a bullish advance.
-SPY- Stocks made a new closing high. To promote more upside the McClellan oscillator (below) needs to breakout to fresh highs.
-WTIC- Oil formed a swing low off the 200-day MA; prices are at a crossroads. They need to hold the 200-day MA and close above the short-term trendline to prevent a more significant cyclical decline. The next cycle turning point arrives in mid-September. A rally back to the $71.00 – $73.00 level by mid-September would promote a head and shoulder topping pattern and subsequent shorting opportunity.
Have a great night.