(www.investorideas.com Newswire) The next few days will be decisive not only for the USD Index and gold, but also for silver, bitcoin and other markets.
The reason is that gold and miners have moved towards their falling resistance line based on the most recent highs.
Miners moved slightly above it, but the outbreak is far from confirmed.
Given where the USD Index is, it seems only a matter of time – very little time – before the declines in precious metals resume.
Confirmed breakout keeps dollar rally on track
Yes, the USD index just fell below 100, but is now trading very close to its rise supporting line. The same line that caused a reversal about two weeks ago.
That is one reason to expect the USD Index rally to continue.
The other reason is the fact that the breakout above 100 has already been confirmed by three consecutive daily closures and a weekly closure. This makes the next rallies very likely.
We see the same thing on the gold futures chart. Gold is testing again the 61.8% Fibonacci retracement level and the descending resistance line.
It’s likely that the top has already been reached, but if not, I don’t expect gold to go beyond the previous high in November. The latter would be in line with what gold did in 2011.
History rhymes: a limited advantage before the bend
History does not have to literally repeat itself. However, it is very likely that it rhymes.
Therefore, I would consider the move to around $4,250 in gold futures as the possible, but not the most likely, outcome. Even while I am predict silver at much higher prices in the coming years, I don’t think we’ll get there without a medium-term decline first.
Silver also moved higher, but because it went to a new high earlier this month – and above the October high – we don’t see the analogous falling resistance line in this market.
Instead, we see that silver has corrected half of its recent decline. This could mean it topped out, but if gold wants to rise to its November high, silver could also rise again. Given that silver tends to outperform in the final moments of a given rally, it may continue to rise for several days only to crash in the aftermath.
Yes, despite the 100 reasons why silver will rise in the long termit could still fall in the medium term, especially if we experience serious problems in the stock market. And seen that Bitcoin’s decline likely heralds trouble in the AI sectorthat’s exactly what we could get.
Yes, the profits from our short position in Bitcoin will likely grow, but when it comes to silver, the biggest opportunity will be to buy at much lower prices due to the unique fundamentals of this market.
Thanks for reading today’s free analysis. Detailed targets and profit-taking levels are available in today’s full version Gold trading warning and invite you to subscribe and read them today, while you still have the opportunity.
Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®
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