Extreme Volatility This Morning In Precious Metals

By Peter Aan.

Nothing is constant except change. As I was writing commentary on these four markets this morning, by the time I got to the fourth one, the markets had rallied to the point where I had to return to the top to rewrite! Here’s what I see…for the moment, anyway.

Gold took a quick dip yesterday morning, but recovered just as quickly, and is making new highs for this move, as mentioned earlier this week. Since meaningful resistance is much higher, there is little reason (except for an overbought condition) to look for anything but higher prices. A close below yesterday’s low of 1108.50 would change my outlook.

Silver took it on the chin yesterday, had a very weak close, turning the chart decidedly bearish. On the positive side, buyers have ignited this market this morning, although we are still well below the high from several days ago. Watch yesterday’s high and low (15.325 and 14.680 in the September contract) as a clue to how this is sorted out. With the momentum I am seeing this morning, 15.325 may be the one pierced. If so, the bulls are in charge again.

Platinum dipped when Gold did, and also quickly recovered. Like the gold, we have penetrated into new highs just within this hour. Significant resistance is about $100 higher, so there is plenty of room on the upside. A close below yesterday’s low of 981.0 would turn me bearish.

Palladium’s fall yesterday actually brought it within a few dollars of the August 4 low of 586.55 (September). It is higher this morning, so the question is whether this market will work higher still and form a double bottom with that previous low, or penetrate to new lows. I think the odds favor a new low, but the impressive strength in the other three markets could buoy the Palladium. Certainly, if Tuesday’s high of 614.40 is taken out, a move to 626.80 (the recent high) will seem likely.

Peter Aan joined Dillon Gage in 1983, and is currently a metals trader for our metals division. He is the author of numerous articles for Futures magazine and Stocks and Commodities magazine. He is the author of The Relative Strength Index: A Comprehensive Research Report and a co-author of Trading Tactics: A Livestock Futures Anthology, published by the Chicago Mercantile Exchange.