Gold Prices This Week and Next Week’s Outlook

Last week amid continued volatile whipsaw action in US and global stock markets gold continued to hang around at the 50 day moving average, basically going nowhere. This is as it should be with the counter-cyclical metal that pays no dividend and has no default risk. Gold is after all, an anchor to the macro casino.

The gold price is safely above the up trending 200 day moving average and also above lateral support between 1300 and 1310. On longer-term charts we have been noting that the upper 1300s is the gateway to a cyclical bull market. So it is no surprise that gold has held below 1360. A new bull market is not going to come on cue and it is not going to come easy.

Gold’s Commitments of Traders structure (graphics courtesy of COTbase.com) continues not to inspire however, with relatively high levels of large Speculator net longs, Commercial trader net shorts and the little guy (small Specs) briskly bullish.

With silver, the story continues to be quite a bit different. Silver’s daily chart is not nearly as bullish as gold’s, as the ancient relic’s wilder little brother continues to be pinned below the thick resistance of the 50 and 200 day moving averages, grappling for support just above 16.

But as we have been noting for weeks now, it is in the Commitments of Traders data that silver stands out (unlike with gold). Here again we see the Commercial traders (whom some would see as the big, bad silver manipulators) closer to net long than the large Speculators. Going against silver’s case is the still briskly over bullish little guy. That last thing is out of character because with the dead silver price action noted on the chart above the small Specs normally would not be so aggressive in face of such lack of action. Usually they chase the price aggressively (as do the large Specs).

Let’s take a look at the big picture of the Silver/Gold ratio. Gold will be the first mover in a new precious metals bull phase but silver soon takes up leadership as was the case in Q4 2008, 2010 and most recently on the 2016 precious metals rally that has been consolidating since the summer of that year.

The handle-like consolidation in silver vs. gold has gone hand in hand with the elimination of the joyous gold bugs spirits of early-mid 2016 and ground things back to square one. The Silver/Gold ratio is oversold and retesting the lows of January 2016. This is all good stuff if you are a patient gold (and silver) bug.

Meanwhile, the macro definitely plays into the situation and as we all know, a giant whipsaw is cutting through the macro at this time. The stock market has gone from robotic uptrend to aggressive uptrend to blow off to massive volatility-infused funhouse in the span of 2 months.

While we are working on various macro market scenarios in NFTRH for the near-term, the larger picture appears to be one of a market top in the making. As I have beat people over the head with for years now, only when the macro turns and the average participant acknowledges that fact will gold, silver and the miners be ready for a real bull run. It’s coming. Meanwhile, each week we continue to do work updating not only the macro and the metals, but prospective mining, exploration and royalty plays.

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