Gold And Silver Approaching Critical Price Points

Gold was down today $28 and closed the COMEX session at $1222.05, which is a loss of 2.30% on the day. Silver went $0.77 lower and closed at $19,21, a decline of 3.87%.  In euro terms, gold closed the trading session at €902.82 and silver at €14.18.

The short term trend is clearly down, both in gold and silver. The hourly chart tells a clear story.

gold_price_hourly_chart_2_december_2013

 

silver_price_hourly_chart_2_december_2013

The short term trend is confirming the longer term downtrend. The daily chart shows an almost perfect trendline since November 2012. Apart from the trendline, the daily chart reveals two other important things.

First, both gold and silver are about to retest their June lows. Needless to say those price points are of major importance. In case they would hold with a vengeance on high volume, it could turn out to be bullish for the metals. However, if support would fail, the odds favour a break through.

A second important element on the daily charts are the Commitment of Traders positions (lower part of the charts). The extreme market situation of June is back: commercial hedgers are holding historically low net short positions. Extreme positions of that “informed money” category usually point to a reversal, although timing is unpredictable. Back in June, when the metals reached their lowest price points, the COT positions were very similar as today. The third chart shows that situation in more detail.

gold_price_daily_chart_2_december_2013

silver_price_daily_chart_2_december_2013

This chart, courtesy of Sentimentrader.com, shows the positions of the commercials (green line) and large/small speculators (blue/red line). Notice the similarity with the situation in June of this year.

COT_gold_silver_2_december_2013

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