How Do Precious Metals Look Ahead Of Fed Rate Decision?
AG Thorson | Apr 23, 2016 10:58AM ET
Gold prices topped 6 weeks ago, and it appears that silver and miners terminated their very extended rallies, in an intense manner. The Fed meets Tuesday and Wednesday of next week, with an announcement following the second day at 2 PM. Traders will square positions ahead of the meeting and prices may stagnate slightly before their decision.
U.S. Dollar - Prices closed outside the wedge, and I would expect them to continue rising from here.
Gold Weekly - A large shooting star candle formed this week, and prices should close solidly below the 10-week MA next week.
Gold Daily - A confirmed price swing formed after the temporary spike to $1,272.40 and Friday saw prices close back below the 10-day moving average. A close below the neckline should send prices reeling.
Gold:Silver Ratio - Prices broke from the pattern but now they need to breach the recent higher low of 71.11, and then ideally a significant support level around 68 to effectively change the trend.
Silver Weekly - Silver made an impressive run higher, but technically speaking it remains within the boundaries of an established down trend.
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Silver Daily - Silver formed a third shooting star candle, however we lack a confirmed price swing, and the recent volatility makes candle patterns difficult to believe.
HUI Weekly - Another reversal candle formed this week. A close next week below 195.91 will make an established price swing, necessary for a top.
Market Vectors Gold Miners (NYSE:GDX) - Prices closed below the low of the reversal day and peaked at $23.82, making an official price swing. As I stated before, I won't feel confident until there are two lower closes below the 10-day average.
SPDR S&P 500 (NYSE:SPY) - Prices corrected slightly but are still trending above the 10-day MA; a close below 206 will suggest a deeper correction is taking hold. Volume has declined since March, but lately it's been picking up and may be getting ready to breakout. Note: The cliché "Sell In May And Go Away" could turn out to be excellent advice this year if money flows and volume both don't pick up.
Crude Oil - Negative divergences are forming as prices struggle near the $45.00 resistance level. They require an explosive thrust higher to fix the discrepancies and break through supply. If they don't move higher quickly, I imagine prices will drop with commodities this spring.
Next week could be interesting; I will be away from my desk on Friday.
Have a wonderful and safe weekend!
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