Last week I noted the potential for a spike-high in gold and silver surrounding Friday’s employment report. Prices peaked at $2089.20 on Friday and immediately began to correct. With the spike high now complete, we should see a multi-week correction into September, followed by another powerful rally.
The near-vertical rise in precious metals over the last month led to extremes in sentiment. Nervous investors began to chase prices, and that almost always precedes a violent correction (occurring now).
Our Gold Cycle Indicator (GCI) peaked at max cycle topping (450). Prices are likely starting a multi-week corrective phase. The next buying opportunity could arrive in September as the GCI slips back below 100.
-US DOLLAR- The dollar has declined over 10% from the March high. The trend is incredibly oversold and due for a multi-week rebound. Gold and precious metals should correct as the dollar works off its deeply oversold conditions. Note- Any rebound should stay under 98.00.
-GOLD- Gold closed well-below $2000 confirming our guidelines for a spike-high. This should be the beginning of a multi-week correction. Primary support arrives at $1775, with a secondary target closer to $1670 possible. At some point, we should see a convincing bounce.
-SILVER- Silver is melting down after the brief parabolic rise to $29.92. Initial support arrives near $22.50. A retest of $19.00 is plausible in September.
-GDX- Miners closed below the black exhaustion candle ($44.02) last Friday, supporting a top. Prices have collapsed and could reach our initial target of $37.00 quickly. Primary support arrives at $31.00. Note- a sharp decline in the general stock market could trigger an even deeper correction to around $27.00.
-GDXJ- In juniors, we have an initial target of $50.00, followed by $42.00 with deep support at $32.50.
-SPY- Stocks formed a large bearish engulfing candle after making a marginal new high. A sharp correction is becoming possible. Initial support arrives around 300 but could test gap support near 285.
Have a great night.
***Premium Members: I’ll begin adding to the Educational Metals Portfolio once the Gold Cycle Indicator falls below 100 – that could take several weeks.