Very interesting things are happening on the markets today – let’s jump right into charts.
First of all, gold continues its decline despite the continuation of the Israel-Iran conflict.
Actually, gold even managed to break below its rising support line despite all this.
Silver is down significantly as well after topping at its triangle-vertex-based reversal point.
The invalidation of the move above the previous top is breakout’s invalidation – a sell signal. Please note that we saw exactly the same thing in late March – before the tariff-based slide. Is it really just a coincidence? After all, the tariff delay is about to end in a few weeks, and the impact on the world economy will not be just “potential” but very real.
Even the Fed admitted yesterday that the burden of tariffs will be felt – the only uncertainty is what will be affected more – inflation or growth.
While gold and silver are down, the USD Index is up.
For now, just slightly, but overall, the move has the potential to become something much bigger.
The short-term reason for this (I’ve featured the USD Index’s long-term chart numerous times recently, so I don’t want to go into this once again today) is the good possibility that we’re going to see a medium-term breakout any day (or hour) now.
The USDX is testing the line based on this year’s highs once again. This time, not only after the USD Index bounced off its long-term support levels but also after its breakdown was invalidated. This breakout – if we see it and it gets confirmed – could end this broad bottoming process and jump-start PMs’ and miners’ slide.
And speaking of miners, from the long-term point of view, mining stocks just invalidated their move above their 2008 high.
Yes, that’s a major sell signal.
But wait, it gets even worse when you see more context.
The size of the rally that we saw in the XAU Index between the 2000 bottom and the 2008 top and the size of the 2016- 2025 rally are almost identical. The similarity is not just in the way platinum is performing, nor is it in the “just” looming economic trouble – it’s also in the mining stocks.
Summing up, when looking back, things appear to be bullish, but given the similarities to 2008 and other factors, the future doesn’t have to be bullish at all.
Thank you for reading my today’s analysis – I appreciate that you took the time to dig deeper and that you read the entire piece.
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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief