Gold and silver both came within 1% of our upside targets for them earlier this week. With inflationary pressures once again top of mind, have they exhausted their upside potential?  We’ll update our long-term forecasts this morning.

continued for members…

First, a quick glance at markets – essentially a repeat of yesterday’s open.

I’m still looking for SPX 5000 or so as the most logical bounce point.Note that VIX is back below that red TL from Mar 2023.Currencies are also a repeat of yesterday, with EURUSD static and USDJPY creeping higher.

Oil and gas are both a little weaker after another day without apparent escalation between Iran and Israel. Israel is reportedly going to retaliate for Iran’s retaliation, so this could still be the calm before the storm.

CL is testing its SMA20, which it has not closed below since early Feb.

Now, back to gold and silver. GC is fairly straightforward. There’s a large IH&S pattern which completed around Mar 7 targeting 2557, a short distance above the white 1.618 at 2466.50. If GC pops through this level, then the white 2.24 and 2.618 come into play.

You don’t have to be a chartist to see how strong the breakout in March was. Interestingly, it pushed GC back into the purple channel from which it broke down in Sep 22.It also rescued GC’s RSI from a reversal at 80 back to 60. The subsequent thrust put it in a very overbought condition, but there’s still a little room for being slightly more overbought. From a trading standpoing, I don’t think the extra 18.5 is worth the risk of a pullback/consolidation.

For SI, the picture is much more simple.  It got to 29.90, just .34 away from our 30.24 target at the white 1.272. The latest thrust put it at the top of the well-formed red channel and the dashed, white midline of a channel that can only be seen on the monthly chart.

Unlike GC, it has not broken out to new highs.  It might be worth trading if it pops above 30.35, as that would indicate potential to 33.73 or 35.235. But, I don’t believe the chart is as compelling as is GC’s.

Gold and silver prices are driven by a number of factors including global conflagrations, inflation, and strategic accumulation. We write about inflation quite a lot, with the primary consideration lately being the sharp rise in oil/gas prices. These are subject to sharp rises due to the conflicts in Ukraine and the Middle East. Gold, and to a lesser extent silver, can be expected to rise sharply as these issues flare up.

All that to say…even if the charts suggest some consolidation or a pullback, I’d not even consider shorting them. Sit on the sidelines and wait for the next breakout if you want play along with reasonable stops.

GLTA