Gold Buoyed by U.S. Employment Cost Index Report

Two headlines caught my eye this week: “Prepare for gold prices to plunge…as low as $350” and “Forget about whether $100 silver is possible—how about $1,000”. There’s no shortage of shocking headlines, but the reality for the foreseeable future is probably somewhere between $350 gold and $1,000 silver.

Gold worked lower since my last commentary, until this morning when it started trending sharply higher, buoyed further by the release of the U.S. Employment Cost Index report. This gives us an outside day, and a strong close will have us looking for higher prices. A close today above 1104.90 would be a strong sign that some sort of bottom has been put in.

Silver is also forming an outside day, and the tone of the chart is a little more bullish than Gold. We have already pierced the July 23 high of 14.960 (September contract), so a strong close will have me looking for higher prices next week. If we do work higher, the first resistance to watch in the coming weeks is 15.900 from mid-July.

Platinum also has formed an outside day today, but the current price is close to yesterday’s close, so the picture here is a bit more neutral. If buyers come in, watch the July 23 high of 999.70 (October contract). A penetration of that level will be a strong sign for higher prices.

Palladium is the only metal in this group that is not forming an outside day. Intraday, we have taken out the 610.0 level (September) I mentioned earlier this week, giving the chart a bearish tone. In the absence of a strong close today, I continue to look for lower prices next week, with a probable test of the July 20 low of 595.0.

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.