Gold and silver poleaxed on profit taking and inflation concerns

by Chris Becker

Not a fun night for a gold or silver bug with both precious metals slammed down hard after having a huge run up past historic resistance levels and making new record highs.

Silver dropped over 10%, clearing through tentative support at the $28 level after a double top pattern formed on the four hourly chart yesterday, and hitting the pre-breakout level just below $25USD per ounce:

Gold fell over $100USD per ounce, as a breakdown below the psychologically important $2000USD level gathered pace overnight, taking it well below its pre-breakout level:

Bitcoin took a hit too, cracking through it two week long uptrend channel, having retraced nearly $1000USD since the start of the week:

The question is it mainly about the resumption of strength in the US dollar, finally finding some strength after falling throughout July, with tonight’s upcoming CPI print following a modest NFP number last week turning investor’s sights again to inflationary concerns:

Or is this just another in a long line of corrective phases in bubbles, blowoffs and big uptrends, where speculators got a little bit ahead of themselves? Gold ETFs in the US had two consecutive days of outflows leading up to this correction, so obvious profit taking is obvious.

Where to from here? Gold is still well above its previous historic high reached in 2011 (on both a closing and intra-session basis), so as long as that turns into support in the coming days, this is the first stage of a shakeout and consolidation before the next leg up:

Silver is a much wilder commodity to discern, with the daily chart obvious in its bubbliciious, the weekly chart looking even worse. Trailing support at just above $23USD per ounce must hold here in the short term, but don’t be surprised if it retraces further and faster than gold (not the 10% vs 4% correction relativity overnight respectively):

Precious metals are not for the faint hearted.

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  1. Chris
    The rise in gold and silver were rediculous last few weeks
    Both were due for a correction
    DXY is the shortest it’s been in history (CFTC EUR long 180,000 contracts)
    The rise in EUR has been running as fast
    There is a short squeeze coming in the USD

    • Agree with all those points BCN. Was a very easy market to short overnight, could almost take the rest of the month off, but I smell some more volatility coming down the pipeline…

      • I said to the guys the other day gold market was very long

        Chris I did a bit of research

        In APRIL 2018 Is when the falls started in the AUD from 78c there about
        The market was actually square and as AUD fell to 55c in APRIL 20 the shorts kept building
        So in all of the 2 year fall in AUD the market was short all the way down
        That’s obviously why we had such a viscous bounce from 55 to 70
        It’s the same thing in DXY it’s falling in a short position market with shorts growing now like DLS said there is more to come, maybe we see high 80s into election I don’t know but when the USD turns up get out of the way it’s going to be a violent move up that’ll catch the bears very short …. it’s coming not sure when
        Can’t see gold now breaking over 2,000 looks like 1800/2000 range and eventually break down as the USD starts to rise
        I like GOLD but the rise was rediculous
        Well done, I’m not willing to short gold, I just remain patient to buy on big sell offs
        Golds going up but market is very long, we need to clear longs for a period of time
        Think we are due for an equity market correction too
        I’d be very careful sitting too long ASX or DOW or NADAQ here, equities have been one way too
        Let’s see

  2. migtronixMEMBER

    I’d take the rest of the month off. Except doing that would be same as doing exactly nothing :/

    • Silver is going to fall a long way from here before it rises
      Think you’ll see 15/20 level again

  3. It’s all over – the two month bull market is cooked. 10yr bear market ahead 😉

    With budget deficits at 10% give me dullahs any day

    • No GOLD and SILVER are going much higher but a very good sell off to take all the longs out first
      I’d say 16/18 silver 1500 there about gold before we go up
      We are going to shake the Robin Hoods out first
      These young speculators are going to get a big lesson in life
      No easy money in life
      Property investors going to get their lesson that property doesn’t double every year …. at a certain point it halves every 7 years

  4. wow gold is holding on by a thread. I dont think its going to close the day above 1911.
    Still has not touched the bottom trend line and RSI on the day is still 47. Plenty of room to drop more.
    If it doesn’t hold then I think that it for PM’s for a very long time. Its a very very long way down.

    • I just sold 10oz of silver locally to a jeweller in 10 hours of advertising for $600. That’s $60 per oz.
      Zero none nada 1oz gold bullion (talking perth mint here) available. Minted ounces selling fast online for $4200! Paper and physical prices are total disconnect. Huge demand and waiting times for the real deal. They can shove the ETFs where Reusa don’t shine.

    • I just sold 10oz of silver locally to a je weller in 10 hours of advertising for $600. That’s $60 per oz.
      Zero none nada 1oz gold bullion (talking perth mint here) available. Minted ounces selling fast online for $4200! Paper and physical prices are total disconnect. Huge demand and waiting times for the real deal. They can shOve the ETFs where Reusa don’t shine.

      • Just checked online at ABC and Perth Mint. 1oz GOLD is trading at $2700 and $2660 respectively and in stock.
        Emailed them to double checking availability.

        • GOOD LUCK!

          “Currently out of stock. Please call Sales Support on 1300 201 112 for stock updates.”

          It’s pretty much like that for all bullion including silver (even more so).
          Word is at least 8 weeks pre order but that changes too.
          Perth mint is the global gold standard and is hot property. (nobody wants abc bars).