Technical Analysis on Precious Metals
May 8th, 2008 | By Penny Sleuth Contributor | Category: CommoditiesGold was taken to the woodshed the past few weeks…
Support at $875 was broken and caused a sharp run to the major multi-decade support area of $850. I don’t see Gold going any lower but if it does it still does not signal an end to the bull market. We need to see many other things fall into place for that to happen. Right now the fundamentals for the metals to go higher are better than ever and improve weekly.
All the major technical indicators — RSI, MACD and slow STO — are in buy territory as they only get to these lows at major bottoms.
Short term Gold must hold $850 or run the risk of running to $825. The 200-day MA should provide good support there along with chart support.
Don’t worry, technically this is healthy action and the multi-decade high of $850 should be tested and hold to signal an ongoing bull. While some people see the breakout as never to be tested, in my experience, more times than not the price will come back and test that area before resuming higher with a large degree of force. So you can trade it that way if you are shorter term and technically inclined. I have been buying recently…
Silver
The indicators are very oversold but not yet extreme and could actually benefit from coming down further. Next support is the moderate area of $15.50 then stronger support at $15.00.
Platinum
Platinum was down but very constructive as no real support was broken and it closed the week above the $1,900 area where support is building:
Thursday’s gap down was filled quickly on Friday, which bodes well for continued upside strength.
The fundamental just got a whole lot better this week and the only way a major decline will happen in Platinum is if production jumps a large degree in short order. And I just don’t see that happening…
Palladium
Palladium broke loose and ran down to the 200-day MA, which held up nicely as well as chart support at $400:
This metal has a long way to go on the upside and the fact that it resolved itself so quickly and in a good technical manner bodes well.
$425 is resistance then $450 and $475. The indicators are healthy and could even stand to go a bit lower. They could come down further and that would give Palladium a downside target of the January gap region of $375.
Either way we look at it the Metals will be higher this time next year. For more on this story, check out www.preciousmetalstockreview.com. There you will find this story, along with my others on similar subjects.
Warren Bevan
Penny Sleuth Reader
May 8, 2008
P.S.: Peter Barnes the CEO of Silver Wheaton expects the price of Silver to reach $30 an ounce in the next few years. This is a very conservative and safe estimate in my opinion and I am calling for at least the all-time high around $50 to take place within a year and a half.
