Gold, Silver And Copper – Commodity Piece

Precious Metals Continue Their Ascend

Gold Technical Picture

In our last Gold update (found here), we had mentioned that the technicals were reset and Gold’s renewed momentum has usually been good enough to break the ongoing range (orange box in the image below). That’s exactly what ended up happening, with Gold seeing new all-time highs once again.

The inverse head and shoulders target of $2575 is now a little over $100 away, and with a bullish MACD + 9, 21 and 55-daily EMAs sloping up, we think this target is just a matter of “when”, not “if”.  After that there is a possibility of a deeper pullback, but we’ll evaluate based on the technical picture present once that target has been hit. For now, the road looks clear for the Gold bulls.

Silver Technical Picture

Silver, on the other hand, has not been able to surpass its previous highs from a couple of months ago. This is a little disappointing, but the bullish technical structure is still maintained. Based on the ongoing price action, some more consolidation or even a pullback to the 55-daily EMA is possible. The key is to hold the $28.84 support level.

Why has Silver not followed the strength shown by Gold? A probable reason is the recent economic weakness that has begun to emerge. Silver is not just a precious metal, but is also used in various industrial purposes. In fact, more than half of all Silver consumption is for industrial purposes. With investors seeing a slowdown in the economy (contracting ISM manufacturing PMI), they might be expecting a slowdown in demand for industrial metals like Silver. This has been a headwind to Silver lately.

Copper Technical Picture

A slowdown in the economy has also been reflected in Copper prices, which have retraced all the gains made in the first 10 days of July. Dr. Copper is back to its support region between $4.29 and $4.35, which is an important region to hold. A confirmed break below this region could put in the $4.14 support in play. Such a move could also potentially indicate further economic weakness, given its wide use in many sectors of the economy.

However, to interpret potential downside in copper as a sign of further economic weakness, we would require further confirmation from the Macro front. This is primarily because of Copper’s positioning. In our last Copper update (found here), we had highlighted a couple of charts that showed that Copper’s positioning had become extremely bullish. Therefore, further downside here could also just be a reset of the extremely bullish positioning, instead of a confirmed indicator of further economic weakness.

In the next section (for Paid Members), we’ll look at an important Macro development related to Copper and an intermarket development related to Silver. We will also provide our Paid Members with our proprietary Cycles Forecast for Gold, Silver and Copper, so that our members can position accordingly. We’ll then follow-up on this Commodity Piece with an update on Gold and Silver Miners.

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Copper – Macro Development And Cycles Forecast