Gold price getting ready to move big, could be lower

May 5, 2020

New York (May 5)  For weeks we have been long in gold, watching it make a run at new recent highs. About a week ago, we warned about forced liquidation that we were seeing, although we stayed long through it all. The pattern has slowly turned to slightly negative. We remain long with our proprietary algorithm but see a lot to be concerned about.

Gold has made lower highs and lower lows for the past two weeks but continued to maintain major support around $1,700 in the June futures. Between Monday and the overnight trade, it is obvious that gold is preparing for a much bigger move. Gold can still go big either way. We remain uncomfortably long and believe the move could be lower. We trade mechanically based on our algorithm, but something does not look right.

Silver and platinum look mediocre as well with both on major support levels with a lean lower. We warned a week ago that platinum and silver did not look great when they failed to break out to the upside. We are still long, but like with gold, have a lot of concerns that the patterns are changing. Remember that we only trade with our model, but from a trader’s perspective, something looks rotten.

Here are the levels to watch: June gold futures, $1,680-$1,700 support; July silver futures, $14.70-$14.50; and July platinum futures, $760-$750. If any of these markets close below those support levels, it will trigger a sell signal. We will stay long until those levels fail and our algorithm reverses, which means we will be long until tomorrow no matter what.

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