Is this it for the dip in metals? On Friday, we suggested that pullbacks may continue to be shallow. Since gold hit exactly $1810 on spot Sunday evening , the pullback has manifested. For traders who took profits over $1800, this may be your chance to swoop back in. If the sell down continues, however, bulls should hold the $1750 level, or better and more precisely, $1762ish on spot. The below is a 4-hour gold chart demonstrating oversold momentum in a newly established upward trend.
In early October, when we suggested the bottom was in for the stock market, having pointed to the SPY as a proxy, we suggested a specific downside gap would need to be filled on the way back up. In the daily chart below, that gap is pointed out with the green arrow. Last week, we also suggested that taking profits in stock positions would not be wrong. Stocks have since begun their retracement; the most obvious spot for a bottom would be the wide-open upside gap represented by the red arrow.
We like to keep a long-term perspective by looking at the below monthly chart of the US 10-year bond yield. The last time relative strength stretched toward the 80 level was in the spring of 1980. Are rates ready to start coming down as the economy heads into recession? The current setup remains conducive to that outcome, even if a negative divergence between the rate and relative strength needs to manifest first.Follow J_GidaroDasilva jdasilva@kitco.com www.kitco.
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