Precious Metals: Contratrend Rallies And Technical Price Levels

Gold: Stabilizing

Gold Spot price (GOLDS-1,198.75) slipped to test the prior low at 1,143, below the 2005 uptrend and MAs, holding flat. The recent low may carry a potential positive divergence in the weekly momentum with a higher low on the recent test versus the late 2014 price low (see Figure 23, right arrow), but the current weekly reading is negative and would need to turn positive. One can note a similar positive divergence on the 2013 test of price support with a higher momentum low, followed by a minimal rally (see left arrow).

Currently any rally, were one to occur, could carry toward the broken 2005 uptrend and the intersecting declining 200-day MA near 1,240, as well as toward the dotted 2013 downtrend near 1,300. The monthly momentum, albeit in negative territory, is flat and trying to turn positive, which could also support a contratrend rally.

Any failure to rally, or failure in the momentum readings to turn positive, could result in a breach of the recent supports at 1,143 and would return the profile to negative from neutral, to bring 1,100 back into play as the next lower target.

We do not believe a rally would represent a structural reversal in price, since the S&P 500 / Gold ratio remains in the structural uptrend favoring the S&P 500 outperformance versus Gold.


Silver – Flat

Silver Spot price (SILV-16.97) is in a similar pattern to Gold and would need to move through 18 to suggest rally potential toward 20. Support remains at 15.

Copper – Struggling below Resistance?

The Copper Continuous Futures Contract (HG1- 276.75) followed through on a contratrend rally discussed last month, moving into the five-year resistance near 300 and to the declining 200-day MA then depicted herein. The rally was accompanied by a positive weekly momentum from very negative levels and price quickly reversed down to 277. The monthly momentum model remains negative suggesting the contratrend rally may be complete and price may fluctuate between resistance and the 242 low.

Any further advance could move toward 320 and the 2012 downtrend, but any reversal below 260 would suggest another test of the 242 low.

Platinum – New Low

Platinum spot price (PLAT-1,138.50), depicted herein last month, progressed to our target at 1,100 before bouncing. But major resistance at 1,180-1,200 may prove formidable. Nevertheless, moving through those levels could bring 1,275 into view. Support remains at 1,100, through which 1,000 would present the next lower target. The weekly momentum is negative and flat, with the monthly negative and declining, still putting downward pressure on price.

Palladium – Breaking Down

Palladium spot price (PALL-740.75, see Figure 24) couldn’t regain the uptrend and slipped quickly through support at 750, losing the strength relative to the other metals and slipping through both MAs. The weekly momentum turned negative; the monthly remains negative and declining, suggesting 700 may come back into view as a target. Resistance can be found at the recent high near 830.



The above article is an excerpt from Yamada’s latest monthly update for premium subscribers, released today. We recommend subscribing to the monthly in-depth analysis of Louise Yamada on for quality technical analysis of all markets.

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