Gold and Silver Outlook 12-11-2014

The dollar did indeed bounce higher today and the metals didn’t follow through to higher highs but took a breather. Same goes for the miners. I did buy the dip under $3.00 on JNUG and rode it up for a little profit but JNUG couldn’t get going to one of those break out 10% plus days so I sold with little profit. I am still looking long the metals as both the daily and weekly are green in GLD and SLV but the miners are still lagging the metals so I do so with caution. The dollar may lead the metals which should move in opposite direction tomorrow so keep an eye on what the dollar does for a clue.

Jobs Numbers

What also got me long in the pre-market was my reading of a report about the jobs numbers not coming in as strong as expected. I then got real nervous about my long when I went back to the news and saw the headline for the Weekly Jobless claims actually fell with this note from the Editor;

Editor’s Note: An earlier version of this article was incorrect as the U.S. Labor Department incorrectly reposted the report from the week of Nov. 26.

Rather pathetic.

Look for direction from the PPI numbers and consumer sentiment which come out tomorrow.

Dollar Bounce

The dollar did rise on the fall in jobless claims coupled with a good retail sales report and it kept pressure on gold all day and the stock market was up triple digits rather quickly. But the oil price fall was then blamed for the retreat from the triple digit gains with the Dow closing up 63. What also didn’t help the stock market is Congress not coming to an agreement on the spending bill. As I type, House Minority Leader Nancy Pelosi is mounting a last-ditch effort to block it according to CNBC.

Others I Follow

UGAZ got the good report it needed and bounced up to $9.50, but it then gave it all back and more as the weather forecasts I spoke about Monday all came in with warmer temperatures the next 2 weeks as seen here: This might want to get one to trade DGAZ which I would attempt a long if it goes over $4.78. This can be a hedge for those trading long UGAZ. Might as well take some profit from the other side if it is the right set up. Naturally one could sell UGAZ and buy DGAZ too. The time for selling may have been after the report as we had a nice bounce. But I still have confidence in it either way with winter approaching in 10 days.  We might have to wait till January to see profit from UGAZ for those that got in at $10 or above.

TZA showed more weakness today as the $13.99 level just can’t be breached just yet. It traded down below $13 at one point, only 16 cents from its 52 week low before bouncing and closing at $13.42. After hours it is up another 17 cents as Congress can’t seem to get things done.

Another day another USO 52 week low. Oil is down even more after hours.

From the Trading Desk

On Tuesday, a broad-based global equity sell off allowed gold to reach its highest level in six weeks.  Gold traded all the way up to $1,238, the convergence of the 100 day moving average and a 50% Fibonacci level (the nine month high in July to the yearly low in November).  This level is now also a double top as it capped the market in gold yesterday too.  Today, US economic data showed that November sales at US retailers grew at the fastest pace in eight months.  Weekly jobless claims also came in better than expected at 294,000 versus the consensus survey of 297,000.  The positive figures translated to a surging USD and equity market while precious metals descended lower.  Gold is now in a new range with resistance at the aforementioned $1,238 and support at the previous breakout level of $1,214.

Silver has traded on either side of unchanged over the past two days after a 4% move higher on Tuesday.  It has managed to hang over $17 for most of the last two trading days but it feels like it wants to test lower.  A decisive break below $17 would project towards the 50 day moving average at $16.62.

My Thoughts on Tomorrow

My thinking is we get a bounce in gold still tomorrow but the PPI and the dollar will give us our clues as to which way to trade. The fact that JDST is again red on the daily and weekly is a good sign for bulls. But again, we have triangles that are all negative for the miners. We should find out soon if the miners take golds lead and start bouncing. If not, then we may head to lower lows sooner than I thought.

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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


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