So, gold moved a bit above the previous highs. This doesn’t concern us directly, as we don’t have a short position in gold.
But it might spark concerns regarding the positions that we do have. Let me start with context.
The USD Index almost reached its support provided by the 23.6% Fibonacci retracement level, which means it might be ready to soar again.
The RSI Index, based on the daily prices, supports that outcome. In each case when the RSI was this low, the USD Index bottomed while gold, silver, and miners topped (or were already after the top). I marked the recent cases with red circles.
The chart from a different provider shows that the USDX is even closer to the 23.6% Fibonacci retracement, and it could be easily reached as early as today.
This means that gold’s move above its previous short-term highs could be invalidated shortly.
Please note that the December top (which was when we shorted NEM, remember?) formed slightly above the previous top. Consequently, seeing a breakout here might be a way in which history is rhyming – this could be the way gold is topping here – through a fake breakout.
Silver is up, but it’s not as high as it was when we took profits from the previous long positions. It is another breakout, though. Will this one be invalidated as well? That appears likely to me.
Please note that silver often pauses after the top and before the slice. That’s how it topped in October 2024 and in July 2024. Consequently, seeing a third top here is rather normal.
Finally, the GDXJ moved to $47.47 yesterday, which is right in the middle of my previous target for this rally. Even if we move to $48 or a bit above it, GDXJ will remain in the target area, so I’d like to clarify that such a move higher would NOT change the outlook here.
Please note how the GDXJ has been making lower highs since October while gold has been making higher highs. This is one of the reasons why we’re not shorting gold here, but mining stocks. We’re positioned to take advantage of miners’ medium-term weakness relative to gold. Details of the positions are available to my subscribers.
Live Update on Gold – Jan. 23
In other news, you might have received a notification about an event planned for tomorrow (Jan. 23, 11 AM EST / 5 PM CET). I will be providing a live update on the market (with the emphasis on the precious metals market). Yes, it will be recorded, but there’s a Q&A session planned, so it might a good idea to attend live. Please RSVP on the event page.
This event is free for my Gold Trading Alert subscribers. Non-subscribers can purchase tickets for $49.
The plan for the webinar is the following:
- Update on the current action in gold, silver, and mining stocks as well as the USD Index and other related markets
- Q&A session (market-related)
- RMP® insights - some of the actionable details from the key, science-based psychometric tool: Reiss Motivation Profile®
- Q&A session #2 (remaining questions)
RMP is a complex, personalized tool, so during the webinar, I’m going to focus on a brief introduction and going over 1-3 core motivators. Knowing them (and knowing yourself better) can help you in your trading, as it may help you to realize that what you’ve been looking for at the markets might be found somewhere else. This way, you can approach the markets with less pressure – lower stress, lower tendency to overtrade and overleverage. This leads to better results and better life quality in general.
I hope to see you tomorrow.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief