Metals: What Happened?

In my last post, I commented on the strong breakouts in metals out of bull wedge consolidations. These breakouts were ultimately short-lived and quickly reversed on vaccine news, washing out swing longs and once again pushing price lower to another test of falling resistance. The thesis from that post remains intact – metals continue to remain in strong uptrends with price likely to push to higher highs – but in the near term price continues to digest supply and needs more time.

GOLD

Gold has a confluence of support coming in at 1832, 1828, and 1822. Below there, 1790 lingers as the key breakout level from the 7-year base. With stochastics oversold, the downside on this selloff looks limited. For those with a longer time horizon, the area between 1790-1830 is a strong area of support.

SILVER

In Silver, I am watching 23.08 (retest of 161.8 Fibonacci extension) and 22.57 (the anchored VWAP from March low) as important levels. Like gold, silver is getting a little oversold on stochastics and I think the 22.57-23.08 is very likely to hold.

10-YR NOTES

Gold has been highly correlated to 10-year notes, which have also been consolidating and are now coming into rising support from the October 2018 low. Long consolidations like this within strong uptrends are much more likely to resolve in the direction of the underlying trend, and if 10-year notes rally off support, we can expect gold to be not far behind.