A few weeks ago I stated Gold would remain under quite a bit of pressure for the first 14-15 days of October and we see exactly that. Moreover, I further suggested that Gold would trade in a 1489-1517 (on average) range for the first half of the month.
Most people believe that Gold has dropped and will continue to drop based on the potential USA-China deal. However, this is in actuality, incorrect. Gold is in roughly a 2-3 month correction and will eventually break-out anytime near Halloween to the first week or two of November. Gold initially rose incredibly quickly and it is not uncommon for Gold to undergo a stagnant 2-3 month correction before a more steady and consistent rise upwards. For this reason, even if the market has down days it is unlikely Gold and Silver will shoot-up in a big-way, but rather form dead cat bounces off oversold conditions.
While most traders have been optimistic about the recently announced Phase 1 trade deal it is important to note that this phase has not been finalized, written or signed for. In real-world practicality this was a tactical move by the Chinese to keep Trumpy happy to postpone tariffs and they have been successful. Phase 2 and 3 will likely have much of the same back-and-forth uncertainty and tariff escalation as we saw in the last 15 months as time moves forward. For this reason, I am extremely hesitant the market will push the general markets to ATHs, particularly because of the “need” for rate-cuts which may not happen at all for the remainder of the year.
Nonetheless, it should be expected for quite a bit of profit taking to be present in the general markets if the market can re-test a 2992-3000 level.
While in the short-term Gold and Silver will remain under pressure I believe technically, much of the extreme downside has been priced in and Gold and Silver will continue to find support near 1470-1477 and 17.35-17.5 respectively before an eventual rise in the next 2-4 weeks.