Gold’s Sharp Selloff — Shallow Correction or Major Trend Reversal? Gary Wagner Charts Gold, Silver

Summary

In this insightful discussion on KCO News with Gary Wagner, the focus is on the recent market adjustments for gold and silver, which have seen downward movements from their recent highs. The decline is attributed to profit-taking and routine corrections within the broader bull market, as well as eased tensions in the Middle East that traditionally bolster safe-haven assets like precious metals. Despite the pullback, gold and silver remain strong, supported by an uptrend over the past weeks. Wagner, a technical analyst, delves into the technical patterns of gold's price movements, noting a significant $400 rise in a few months and a 2% drop. He discusses the impact of geopolitical events, such as the situation between Israel and Iran, on gold's performance and the importance of market sentiment in influencing asset prices. The conversation also touches on the resilience of silver, its susceptibility to broader market trends, and the influence of the US dollar's strength on precious metal prices. Wagner emphasizes the role of market sentiment and macroeconomic factors in predicting price movements, providing a comprehensive outlook on the current state and future of gold and silver in the market.

Takeaways

• 📉 Gold and silver are experiencing downward adjustments from recent highs, with gold at around $2300 and silver just above $27.
• 🔍 The downward movements are partly due to profit-taking and a week-long liquidation, which are typical market corrections within a broader bull market trajectory.
• 🌐 Geopolitical tensions in the Middle East have eased, which usually lessens the appeal of gold and silver as safe havens.
• 📈 Despite the week's pullback, both gold and silver maintain a solid footing in the market, supported by a strong uptrend over the past few weeks.
• 📊 Technical analysis using a daily standard candlestick chart of gold shows a significant rise from $218 to over $2400 in a few months, indicating a strong market move.
• ✈️ Recent geopolitical developments, such as Israel sending planes to Iran and the subsequent tepid response, have influenced market movements.
• 📉 Gold declined by over 2%, or about $63, fundamentally influenced by the de-escalation of tensions between Israel and Iran.
• 📈 The Federal Reserve's recent hawkish stance on inflation and the potential for rate cuts has implications for the direction of gold prices.
• 📊 A Fibonacci retracement analysis suggests that if the current market trend continues, gold could move to about $2280, which is the 38.2% retracement level.
• 📈 Silver's resilience is shown by the small upper wick on the candlestick chart, indicating that the opening and high prices were nearly identical, and the close was at the low of the day.
• 📉 Silver's downturn was less severe than gold's, but the technical analysis shows a significant drop, with the first level of support at about $26.10.

Q & A

What has been the recent trend in gold and silver prices?

Gold and silver have experienced downward adjustments from recent highs, with gold ranging in the mid $2300s and silver just above the $27 mark. This is partly due to profit-taking and a week-long liquidation routine corrections within their broader bull market trajectories.

What role does the situation in the Middle East play in the appeal of gold and silver?

Geopolitical tensions in the Middle East can affect gold and silver as they are often seen as safe havens during uncertain times. However, recent easing of tensions has lessened their appeal.

What was the significant move in gold prices in the past few months?

Gold prices have risen tremendously from around $218 to over $2400, marking a $400 move in just a couple of months.

What technical tool did Gary Wagner use to analyze the market's rise or fall?

Gary Wagner used a basic Fibonacci retracement, a standard tool that market technicians use to ascertain the correct level after a market has had a significant rise or fall.

What does the Federal Reserve's recent stance on inflation imply for gold prices?

The Federal Reserve has been hawkish, stating that their work on inflation is far from over. This could influence gold to move higher or lower, depending on their actions and comments regarding interest rates and inflation control.

How did the decline in gold prices on the day of the interview relate to geopolitical events?

The decline was fundamentally based on the announcement that Israel had sent planes to Iran, but the promised retaliation was tepid, indicating a de-escalation of tensions which led to a roll-back of the premium added to gold due to potential conflict.

What is the significance of the candlestick chart in technical analysis?

Candlestick charts provide a visual representation of the open, high, low, and close prices for a security. They allow analysts to identify patterns and trends, such as support and resistance levels, which can indicate future price movements.

What is the current support level for silver that Gary Wagner identified?

The first level of support for silver is about $26.10. If the current downturn is a one-off event, a rebound could be expected around this level.

How did the recent strong move in silver prices compare to previous rallies?

The recent move where silver went from about $25/24 up to $27 in two days was exceedingly strong compared to previous rallies, indicating aggressive buying and possibly running through stops.

What is the historical context of market sentiment in trading?

Market sentiment has been a fundamental force in moving markets for hundreds of years, ever since the establishment of the first futures exchange. It reflects the collective attitude of investors toward a particular asset or market.

How does the strength or weakness of the US dollar impact precious metals prices?

The strength or weakness of the US dollar, as compared to a basket of foreign currencies, can influence the prices of precious metals. A stronger dollar can put downward pressure on metals prices, as it makes dollar-denominated commodities more expensive for holders of other currencies.