Yesterday we saw the first real rally of any significance in gold since early November. Gold futures open interest also experienced its largest 1-day increase since September 6th (more than 11,000 contracts). After the beat down that gold has gotten since the election yesterday’s rally is simply a first step and there is a lot more work to be done to repair a badly damaged chart:
Gold (Daily)
The first minor resistance comes in near $1170 with much more significant resistance in the $1190-$1200 area.
If $1124 does turn out to be the low of the recent correction it will be a bullish omen for the much bigger picture because it will be a higher low relative to the December 2015 low at $1045, and it will have occurred on the most depressed sentiment on gold in at least 20 years.
Turning to silver, gold’s little brother has formed a large bullish falling wedge pattern since October with bullish RSI divergences and a bull MACD cross about to take place:
Silver (Daily)
A breakout above ~$16.60 would offer a measured move target of ~$19 (correlates to November high).
Zooming out to a one year chart of silver it’s easy to see the importance of the $15.70-$16.00 support zone:
Silver (Daily – 1 Year)
The lows in gold & silver which were made earlier this month now become important reference points, the longer it takes for them to be retested the more significant these lows become.
Thank you for reading Energy & Gold and we look forward to a profitable and opportunity filled year ahead in the precious metals and resource investing space!
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