Precious Metals Funds Report Large Outflows

By Peter Aan

Signs of the Times: Goldcorp, a major North American gold producer, cut its dividend due to weak gold prices, and stated that it would consider reconfiguring or partially closing mines if gold should linger below $1,000 for an extended period. Precious metals funds reported outflows at $1.2B, the largest weekly outflow since December 2013. Let’s look at the technical picture as we start the week.

Gold is moderately lower as I write this, and continues in a sideways pattern, still digesting the steep fall from the first half of July. I continue to see a close above 1104.90 (December contract) as a strong bullish sign, and a penetration of Friday’s low of 1079.2 as a sign that new lows are likely.

Friday’s close was near the middle of the trading range, and this morning we are somewhat lower. A penetration of Friday’s high of 14.970 (September) would be decidedly bullish, but if Friday’s low of 14.510 is pierced, I look for a probable move through the recent lows.

The 999.70 high (October) of recent weeks should still be watched as a signal for higher prices, but this morning’s action is lower, and Friday’s low has been taken out. Lower prices, and a test of the mid-July low of 946.30 seems possible.

Does Palladium even know that it’s a precious metal? It’s often at odds with the other three, and today is showing impressive strength. It’s still a sideways, congested market, though, and like the others, will only look bullish when it can trade above the range of recent weeks. If today’s close is strong, we could see movement later this week towards the July 23 high of 641.50. If today has a weak close, we could slump down towards the recent lows.

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.