Phil Streible with Blue Line Futures discusses Gold, Silver, Copper, Platinum, and other commodity topics.
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Good morning. It’s Tuesday, December 5th, about 6 a.m. Central Time. Overnight, the precious metals are mixed after yesterday’s bloodbath. Yo. February gold unchanged at 2043 March. Silver down $0.24 at 2466. March copper down four at 3.79 and January. Platinum down 15 at 909. It’s kind of a quick review. If you look at last week, we saw a grind higher on the precious metals in a low volatility environment.
Friday, you get this technical breakout to the upside, which attracts a lot of momentum traders. We also have Mideast tensions going on, rising news about the the Red Sea, the Russia-Ukraine conflict. We saw US-China tensions with them accusing the U.S. of illegally entering the South China Sea. A lot of geopolitical news after the technical breakout on Friday and it results in this blow off top, this chasing of emotions, though, a lot of stops being hit, a lot of miners coming in and shorting the futures contracts to lock in and forward hedged out production.
And when you get these kind of big reversals that occur, like what we saw Sunday night. A lot of emotion take over. A lot of stops get triggered on both fronts. And that’s how you get gold moving, $113. You get silver moving a dollar 55. Now, are prices justified to go up to those levels? My personal long term belief in 2024 we’ll see 2300 gold.
We will see $30 silver. That is my opinion and I’m entitled to it. Now, if you look at some of the different market developments that are going right now, the reality is with the U.S. that the U.S. economy is slowing. Inflation is fading in Expectations for a rate cut are being pulled forward. I do not believe that Jerome Powell will end up going through with these massive rate cuts in March, like what people expect.
Now, you go across the pond, China’s or you see Bea’s outlook is much lower. Their CPI came in at 2.4% lower than expected. I think the rate hikes are done and I think they will cut more than in the U.S. And what does that equate to the euro? Currency should sell off the dollar index, which is a 57% inverse relationship, should rally.
The correlation between the dollar and gold are inverse. So when the dollar goes up, gold naturally goes lower. Silver pulls down with it. Silver getting the one two punch was not only the sell off in gold, the rise in the dollar, but it was also China. Moody’s Investors Services put China’s bonds at risk of a downgrade. Chinese stocks dumped to a five year low.
China is one of the largest consumers of copper cap. Silver is a byproduct of copper. These things are all interconnected and I think it would be very foolish to not be connecting the dots. Be the detective. Try and map everything out here like you’re investigating a homicide scene. Now, if you look at the key levels of support and one of the questions people need to ask themself is, was that a blow off top in these metals?
Is this going to be an intermediate term sell off in that market? And do you buy the dip or do you wait to see the market consolidate? Now, the continuation down today tells you that the liquidation is not over. Gold, as I’m doing this, just reversed when negative on the day silver is down $0.25. So if you added positions yesterday trying to buy the dip, you would want to naturally have a battle plan in place is where you would exit those positions.
And it’s best, in my opinion, to always take the small loss rather than wait for this thing to slowly arrayed your, you know, erode your capital. And then I get an email from a random person who’s like, I buy gold at the top, What should I do? Or I bought silver at the top. What should I do? Or I’ve been long.
Something like palladium for hundreds of dollars higher. And what should I do? Or even natural gas. I get these emails all the time, so it’s very difficult. You should really have a plan in place. And if you don’t really want to have a plan, you need to really focus on position sizing that will allow you to ride out some of these bumps and bruises.
So look at the key levels here. Gold is bullish, but it is threatening to go neutral when your critical levels of support, your weekly support is going to be 2039 and the gold market below, that’s going to be your trend reversal point. 2018 the 200 day moving average is 2000 for your 50 day moving average is 1976. I think the line in the sand is really any kind of close below the 2000 mark.
I do see value in prices right here, but that is really your area of caution. So it’s about a $40 range looking at silver. It’s a bullish trend, but it raced away about a week’s worth of price action. So, you know, if you missed it on the way up and now it comes down and it set the price a week and a half ago where you’re dying to get in.
Well, Christmas came early. It’s back at your price level. So but you need to decide what the new price momentum where you think things are going. So on the silver market, I think you wait a little bit more for the consolidation. So your critical levels of support are the 200 day moving average at 2418. Then below that’s going to be the trend reversal point at 2375 gives you about a 50% rate or 50 cent range there of where, hey, this is a value.
And then, hey, this is cautionary. We should wait for a consolidation. The 50 day moving average below that at 24, 30, 23, 42. That’s what you want to kind of wait and see if it’s going to bounce between these two. It’s done. This in this market has moved in quite a bit of cycles. So the outside markets here are a bit mix.
Dollar index up five. Crude oil is unchanged. Equities are a bit lower, Treasury yields are a bit softer. We should see higher gold on that lower Treasury yield. So something’s a bit up here and I think that it’s a lot of the economic data that’s coming out. I have services, PMI, jolts, ADP, initial claims, nonfarm payrolls, a lot of jobs data.
You got any questions? Give me a call videos running a little bit long here 3128587303. Remember futures option trading does involve risk loss may not be suitable to all investors. Good luck and good trading.
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Phillip Streible, Chief Market Strategist