As you may recall, the last Gold and Silver Market updates posted on the April 21 called for a precious metals sector correction, but after the dip that followed, gold and silver rallied back up and made marginal new highs early this month, new highs that were not confirmed by momentum because they were forming Double Tops, which is made abundantly clear by today's rather dramatic drops in both silver and GDX, as can be seen on their 6-month charts below.
Starting with gold, we see that it is rolling over beneath the upper boundary of the provisional uptrend shown with the now rather large gap between the moving averages suggesting that there is a good chance it will react back to the lower channel boundary, with some chance that it will drop back further towards the 200-day moving average, depending on what the dollar does.
Note the bearish long-legged doji about a week ago that called a top.
Silver, meanwhile, put in a more distinct intermediate Double Top, and it looks more likely that it will drop back to the vicinity of its 200-day moving average since, at this stage in the cycle, silver is not as strong as gold.
Note that silver today broke below the support at its late April lows making further decline likely, notwithstanding any minor short-term bounce.
The chart for GDX, in other words, precious metal stocks, looks remarkably similar to that for silver, and the prognosis is the same.
What we are talking about here is a correction, not a bear market, and it will therefore be viewed as a buying opportunity for the sector.
Originally published on clivemaund.com on May 11, 2023, at 7:35 pm EDT
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