It’s been a wearisome grind lower in precious metals over the last three months. Cyclically speaking, we should be approaching the next 6-month low. I see the potential for a bottom at the end of May if prices drop a bit further. So I think we’re close to a tradable bottom.
Gold miners have been resistant to lower prices over the last three trading days. They are acting like they want to bounce. A rebound into the last week of May could identify a top to a potential head and shoulder pattern. If established, it would imply more weakness into June. Whatever the case, I expect the next significant turning point (high or low) to arrive between May 28th and May 31st.
-US DOLLAR- It looks like the dollar is consolidating a bit after last weeks sharp rally. Next, I think prices will test and likely exceed the 98.00 level.
-GOLD- The next cycle turning point should arrive during the last week of May. Prices have been correcting for 12-weeks, so the odds favor a low at that time, but it’s not guaranteed. If prices grind lower over the next week or two, I will look for signs of bottoming around the $1250 level.
-SILVER- A test of the $13.86 low remains our primary target as long as silver stays below $15.00.
-GDX- The gold miners continue to show relative strength, and a bounce remains possible. Typically, I like to see the right shoulder of the head and shoulder topping pattern approach the left shoulder height (closer to $21.50), and that remains possible. But if prices slip below $20.00 in the coming days, then $18.50 will become my preferred downside target.
-GDXJ- Junior miners have resisted the recent downside pressure in gold. The next cycle turning point arrives at the end of May. I drew a resistance box in case prices bounce into month end. Closing below $28.00 would establish a breakdown and support a target near $26.00.
-SPY- I’m still watching to see if prices make it to the 300 level by the end of May. If they do, I will look for a possible top at that time.
-WTIC- Oil continues to consolidate. Progressive closes above $64.00 would imply a short-term breakout. A daily close below $61.00 would trigger a second leg lower to test $55.00 – $58.00.
Have a great night.