Gold Prices This Week and Next Week’s Outlook

From last week’s article, Recent Strong Rally In Gold And Silver Prices Deserves A Break…Correction …

“…while there could be some grind or a pullback at resistance, the sector could have another push higher later on in January.”

Here yet again is one of the guides to that view, the 30 year average seasonal graphic from Sentimentrader.com (markups mine) showing the secondary low we’d projected in December and at the very left, what is usually a bullish January.

There was a pullback alright, and if you blinked you missed it. But using the miners as an example, the sector did do exactly what we’d asked it to do in order to maintain the resumed January rally view, that was to hold the green dotted support on the chart (HUI) below.

This is the busy daily chart we’ve been using in NFTRH to manage the sector view since last summer. We nailed the top at 220, were frustrated on a couple of bounce attempts in November and then prepared for the final washout and buying opportunity in December.

But the importance of HUI’s daily chart today is that new rally high on Friday. As long as that new high holds the next objective is 205 and beyond that, potentially a test of the old 220 high.

Moving on to the metals, gold is once again approaching the gateway to a new bull market.

That gateway is the mid-high 1300s, at which point it was stopped in its tracks, as expected, back in September.

The monthly chart clearly shows this line in the sand. Volume conviction has been building and a fledgling uptrend may be beginning as ADX shows the downtrend exhausted and +DI slightly above –DI.

Silver has so far failed to lead the sector and for it to really get a boost we’d expect that to change.

Nominal silver is lurking just below key resistance. A break above there could bring on a euphoric surge. But first things first; silver is below resistance.

The Caveats

• The gold sector is rising with the greater anti-USD ‘inflation trade’ and though many a gold bug will tout it as so, that is not the ultimate fundamental backdrop to make this sector unique. That would come after the liquidation of said ‘inflation trade’.

• The Commitments of Traders (not shown this week) for gold and silver are once again marching toward a bearish alignment. Have some moderation on any anxiety this may cause; it is only when the CoT complete their trends that a negative reaction is expected.

• The above noted failure (so far) of silver to lead gold amid the ‘inflation trade’ backdrop.

Bottom Line

The precious metals are on the expected rally from December through January and short-term trends are bullish. It is best not to read more into it just yet. An inflationary tide is lifting many boats and the real bull market in the precious metals may wait until many other boats have sunk.

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