Originally published Mar. 1, 2023 by TraderStef on CrushTheStreet
An early February FOMC monetary policy announcement and Fedspeak moments following the press conference resulted in a dollar rally ($DXY) that put downward pressure on the precious metals throughout the month. Below is a selection of choice articles in chronological order since Part 2 of the winter analyses was published (Twitter thread) on Jan. 14, a few data points on U.S. sovereign debt issues, recession signals in the global economy, a link to the most recent updates on the war in Ukraine, then we’ll close with technical analysis on the gold and silver spot charts.
- Russians buy record amount of gold bullion in 2022 – Kitco
- Jim Grant: Bank of Japan losing control of its bond market – TheMarket
- Saudi Arabia: Petrodollar/Dedollarization Oil Trade Settlements – OilPrice.com
- Gold to hit $5,000? – MoneyWeek
- Treasury Taps Retirement Funds to Avoid US Debt Limit Breach – Bloomberg
- Bank of America CEO: Preparing for possible debt default – CNN Business
- Uncertainty over solvency of US government increases – Northern Trust
- Fed’s Powell Sounding Alarm on Debt Limit Again, Echoing 2011 –Bloomberg
- 2011 United States debt-ceiling crisis – Wikipedia
- Accelerating Countdown to Armageddon, Sovereign Debt & Deficit – Jim Rickards
- “Most Aggressive Hiking Cycle In History” Triggers Recession – Deutsche Bank
- Central Banks Turn to Gold as Losses Mount – Mises Institute
- Fed raises rates a quarter point, expects ‘ongoing’ increases – CNBC, Feb. 1
- Central Bank Gold Buying Biggest Increase Since 1950 in 2022 – Peter Schiff
- Global Gold-Miner Consolidation Accelerates – ZH
- Burkina Faso Junta Strengthens Control Over Gold Mining – Bloomberg
- JPMorgan CEO: too early for inflation victory, economic storm clouds – Reuters
- Missouri Ends Income Taxes on Gold & Silver – Sound Money Defense League
- China Buying Gold for a Very Important Reason – Armstrong Economics
- Key US inflation measure surges at fastest rate since June – AP News
- Gold falls on dollar strength, hawkish Fed worries – CNBC
- India Silver Imports Set Record in 2022 – Peter Schiff
- Estimating the True Size of China’s Gold Reserves – Jan Nieuwenhuijs
- McConnell: Biden’s Greenie 401(k) Legislation is ‘Radical’ – Newsmax
- “Little Green Men,” and Metal is Poised to Strike Part XII – TraderStef, (thread)
Let’s move on to the gold and silver weekly charts Be mindful that a window of opportunity for swing or scalp trading paper ETFs, mining stocks, or futures contracts does not necessarily equate to the timing for buying physical bullion and coins, and a weekly chart focuses on the potential price movement for a few weeks. With all that said, we’re in a “back up the truck” (#BUTT) environment for bullion coins from a fundamental point of view and premiums have returned to a reasonable price point. To view a larger version of any chart below, mouse over it to select or right-click and choose a view image option.
Gold Spot weekly chart as of Mar. 1, 2023 at 7am ET…
Excerpt from Dec. 14, 2022 weekly (thread) gold chart analysis:
“Gold printed a high of $1,824 yesterday following the lower than expected 7.1% CPI inflation print, was choppy under $1,815 ahead of today’s FOMC meeting, then closed at $1,806 after a bout of volatility during the monetary policy announcement and live presser… Volume printed lower last week, and this week’s candlestick and Volume bar do not finalize until Friday’s close… The chart is bullish heading into New Year and winter seasonality, but caution is warranted with the usual year-end profit taking and book squaring in financial markets. Also, keep a close eye on the dollar’s price action. If it falls below the 2017-2020 lateral, gold will likely rise, but if it pivots into a relief rally, gold will likely tumble to support. Gold’s next topside resistance is in the $1,830s and support is wherever the 50 Exponential Moving Average (EMA) trends.”
Excerpt from Jan. 14, 2023 weekly (thread) gold chart analysis:
“The pet rock has had a solid $300 rally after the pivot off a Triple Bottom consolidation above $1,611 lateral support. It decisively breached the Down Channel’s topside trendline and moved through all the moving averages in November, took a breather during December at around $1,800, held above the 50 EMA, and tapped the 23.6% Fibonacci at $1,832. The price action thus far in January has tapped $1,920 (2011 high) within a tight Up Channel and might have the momentum to challenge the Aug. 2020 and Mar. 2022 all-time highs at $2,075. There were numerous opportunities in the fall to layer in core paper positions at lower price points or scalp trade the intraday price action…The chart remains bullish with the next resistance at $1,980, and be cautious of volatility while scalping intraday trades. Support is wherever the 50 EMA is trending.”
A pattern developed since the 2020 high and subsequent price chop that now dominates the chart is a Broadening Right-Angled Descending Formation. Upward breakouts from that type of pattern occurs roughly 64% of the time. Gold rallied a remarkable $345 within an Up Channel after the pivot off a Triple Bottom consolidation above $1,611 lateral support, where a rare and bullish 3-Step Swiss Stair appeared on the daily chart that’s noted in the Jan. 14 analysis.
The price action tapped a $1,960 high on Feb. 1, then the FOMC rate hike and Fedspeak sparked a rally in the dollar that launched a healthy pullback before $1,980 could be challenged. There was a Spinning Top and Rickshaw Man (aka Doji candlesticks) close in the preceding two weeks, which are indicative of indecision and a heads up that a correction in the near-term was possible. The price action so far this week is pivoting off 50 EMA support that’s well above the 23.6% Fibonacci level at $1,788. Gold printed a low of $1,805 during the London open on Feb. 28 and is trading at $1,840 late this morning.
The DMI-ADX is trending flat with indecision, StochRSI‘s overbought condition in January held a while longer and flipped to a negative trend that’s currently in a partial oversold state, Momentum, Money Flow, and Commodity Channel Index (CCI) rolled over from their peak and are flat, Volume plunged during this price correction and that’s a positive sign but returned to unremarkable levels without a trend thus far, and all the moving averages remain lined up nicely without any technical damage. The chart is neutral until $1,980 is taken out with conviction. Remain cautious of geopolitical and economic news-driven volatility while scalping intraday trades. Support is currently at the 50 EMA level and some price consolidation is likely before the next FOMC announcement on Mar. 22 that includes a summary of economic projections.
Silver Spot weekly chart as of Mar. 1, 2023 at 7:40am ET…
Excerpt from Dec. 14, 2022 weekly silver chart analysis:
“Silver rallied more than $6.50 off the $17.53 August low to this week’s high of $24.11. A solid Up Channel formed since October and sliced through an overhead trendline and resistance noted last month, consolidated at $21.49 during November, took out all of the moving averages including the 50 EMA and pierced the last topside trendline (red) this month. There were numerous opportunities this fall to layer in core paper positions at lower price points or scalp trade the intraday price action. I cautioned that $24 could be the next consolidation level heading into the FOMC monetary policy announcement, and that’s where resistance surfaced today with a close at $23.83. The chart is bullish heading into the New Year and winter seasonality, but caution is warranted with year-end profit taking and book squaring in financial markets… Silver’s next topside resistance is the 23.6% Fibonacci level at $25.70 to $26.”
Excerpt from Jan. 14, 2023 weekly silver chart analysis:
“The price action in silver printed a high of $24.54 last week and continues to consolidate at around $24 within a tight Up Channel with bouts of intraday volatility. The topside trendline of a Descending Broadening Wedge drawn back to Jan. 2021 is a significant resistance level to breakout from, and must be done with conviction if $29 and $30 are to be challenged in the near-term. This week’s close is indicative of additional upside after a consolidation… The silver chart is bullish but be cautious of continued volatility while scalping intraday trades. The next resistance is at $25.70 to $27.50, and support is wherever the 50 EMA is trending.”
Silver spot printed a high of $24.62 going into the February FOMC monetary policy announcement and rolled over into a correction with gold as the dollar rallied, and closed that week with a long-wicked Marubozu Candle (aka Plunger Candle). The subsequent price action violated all the EMAs and found support at the 200 EMA, a confluence of two Fibonacci levels, and an overhead trendline drawn back to Mar. 2022 when it closed last week at $20.72. So far this week, silver printed a high of $21.16 today and is chopping around $21 as I type. All other studies are nearly identical to the gold chart. Silver is neutral until the overhead 50 EMA is taken out again and the Descending Broadening Wedge’s topside trendline is decisively breached. Remain cautious of geopolitical and economic news-driven volatility while scalping intraday trades.
Barry Sternlicht: “If Powell keeps hiking rates, you’ll have Weimar Republic” – CNBC, Jan. 26
Barry Sternlicht: Finding opportunity in a high-rate environment – Financial Advisor Summit, Dec. 6
Simon Hunt: Global Depression by 2025, Caused by Interest Rates & Inflation – Wealthion, Feb. 28
Plan Your Trade, Trade Your Plan
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