Precious Metals Consistently Lower

By Peter Aan.

As equities seem stuck in a fall/soar/repeat cycle, the consensus in precious metals is consistent: lower prices.

After a disappointing close on Monday, Gold sold off considerably on Tuesday and is sharply lower this morning. If the market closes today below 1134.0 (December contract), it will signal a change in trend. The first support level on the charts is at 1108.50. It’s a relatively minor support, and major support is much lower, at the July lows.

Silver crashed through the 14.395 level (September) that I discussed Monday and has penetrated the 14.100 level from last December, a low made briefly in a panic selloff at that time. This sends us back to the long-term monthly charts to excavate ancient support levels. Silver made a bottom in 2008 at 8.400 and then made a multi-year climb up to the 2011 high of 49.820. So what we have this morning are the lowest Silver prices since 2009. I’m not forecasting a move to 8.400, of course, but lower prices are expected.

Platinum has worked lower, as suggested in my last commentary. I look for more movement towards the early-August low of 945.40 (October).

Palladium continues its steep drop, and has penetrated the 555.90 and 535.00 level I discussed on Monday, bringing us to the lowest levels since September of 2010. There is a support level at 391.20 on the monthly chart, formed on a correction in the middle of the run up in Palladium from 2008 to early 2011. Like the Silver, I’m not predicting a drop to 391.20, I just want to put the current situation into perspective. I don’t think that we can maintain the rate of the current drop for much longer—a bounce in this oversold market is due—but the bears are solidly in control here. Any rally should be considered a correction in a bear market.

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.