Very important employment numbers are going to be released tomorrow, and they could trigger a reversal in the precious metals market.
I previously wrote that gold made headlines, but that was nothing compared to what I saw today:
Goldman just wrote about gold price being possibly at $5,000.
And you know when those forecasts were also getting out of control? In 2011. At the top.
People tend to get extremely excited at the tops. Or to be more precise, rallies that lead to tops take place because people get extremely excited. That’s simply how it works.
At the top, it’s near impossible to convince anyone to sell, let alone short a given market. That’s what we see right now.
Today’s employment numbers were worse than expected, and markets are reacting to it – some more than others, but overall, it’s only one of the first cracks in the bullish dam. There’s much more to come, and to a much more severe extent.
Stocks are flat today, but silver and platinum are already moving down. In particular the latter appears to be vulnerable and ready to slide.
Platinum’s down over 5% today. No wonder, this appears to be the final part of the post-top correction. And the rally that led to the top had pretty much no sense. A sharp – 50% – rally without a real reason. That’s how the “end of the major multi-market rally” looks like. Platinum – being cheap relative to gold – soared, as people got over-excited by the precious metals market in general.
That’s what happens in general – the cheap assets are starting to rally without a reason. Actually, there is a reason – that they were cheap in the first place. The fact that there might have been a good reason for that price level is of no meaning to the investment public that just wants to buy whatever appears to be rallying.
The downside is that very few of the buyers are able to get out with any profit.
What’s going to happen next?
Of course, there are no certainties on any market, but it looks like platinum is about to slide, just like it did in 2020, 2021, and 2023.
The decline is likely to be huge because the rally preceding the July top was also huge.
That final rebound before the slide that we see this month – that’s also how platinum topped in 2008. And in 2011.
Yes, the analogies are that clear and that extremely bearish.
Silver is down after rallying after a breakout as much as it usually did – before declining.
Zooming in:
Gold reached its resistance line. This line previously stopped gold’s rally – will it manage to do it now?
Given that gold is making headlines – that’s very likely.
Besides, the USD Index appears to be ready to soar.
How come?
Simple – the ‘poor, old USD’ is holding its ground despite everything that’s being thrown at it. After Peak Chaos, we saw even… more chaos and the USD did NOT decline based on it.
When even Fed’s independence is being questioned in the mass media, the USD should be sliding – it’s not. This shows that it’s ready to do the opposite.
Not one, not two, but three breakouts in the USD Index provide technical evidence.
Very important employment numbers are going to be released tomorrow, and they could trigger a reversal in the precious metals market – even if they are weak and they confirm the case for lower interest rates. Given that gold just made headlines, and given how extremely overbought mining stocks are, we might have the ‘buy the rumor, sell the fact’ type of reaction.
Thank you for reading today’s free analysis.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief
Being passionately curious about the market’s behavior, PR uses his statistical and financial background to question the common views and profit on the misconceptions.