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Gold and Silver: Markets Could Go Lower

it was a certainty that if Trump won, equity markets would crash and gold would be breaking out again. But the exact opposite occurred. Metals are testing below Oct lows, a rally in the making or crash ahead?

by Jon Salmon, EVR Bullion Limited (UK)

Before we begin

Although I wrote about the possibility of Gold and Silver coming lower once more to signal the final bottom in last month's research 'Gold and Silver: A Market Perspective For Clients', I admit it was not what I expected to happen, especially with the run up to Trump's election victory. I have no interest in making up excuses after the fact to help my case. I was surprised, along with many others, by how the market is now playing out.

Every available article spoke with confidence that a Trump election would see equity markets crash and gold exploding as people jumped into defensive mode. The initial reaction was to see equity markets drop and gold rally $60 but since Wednesday the opposite has occurred. Equity markets are rallying and metals are coming under renewed selling pressure, breaking near-term support and coming in on key supports at lower levels.

 

What's Next?

Now that markets have shown us a decisive indication of what they are likely to do next, I believe the next couple of weeks are going to be important regarding any bottoming expectations. The charts below will show you what I'm seeing:

 

Gold Chart [Daily]

  • I have highlighted where Gold is likely to decline to with a blue box. Ultimately, Gold could come lower toward $1,205 per ounce [dashed horizontal blue line].
  • Technical studies at the bottom of the chart [circled] suggest that we cannot rule out the lows I am suggesting.

Gold Chart [daily] as of 14-Nov-16

 

Silver Chart [Daily]

  • I have highlighted where Silver is likely to decline to with a blue box. Ultimately, Silver could come lower toward $16.60 per ounce [dashed horizontal blue line]
  • Technical studies at the bottom of the chart [circled] suggest that we cannot rule out the lows I am suggesting.

Silver Chart [daily] as of Monday 14-Nov-16

At the end of the day, I think this week to how the rest of the market setup develops.

Looking at the charts above, the technical studies are generating a buy signal but as I mentioned earlier, for now, I would still 'like' to see at least one more lower low to suggest the markets have found a 'solid' bottom.


*This post was published according to the "Contributed Article Terms and Conditions"

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