Precious Metals: Gold Prices Basing for New Rallies - RichardACox/financialmarkets GitHub Wiki

Precious metals markets have had a strongly bullish year, as rallies in gold and silver have hit highs near the $1,300 mark.  Shorter-term, however, we have started to see some declines -- and this has left many investors wondering about whether or not it is time to jump ship and take profits in metals positions.

But when we look at the broader price structure, it is looking as though markets are developing in ways that suggest prices are basing for further rallies.  This is a strong positive for metals investors, and this will likely offer many opportunities for gains if you are holding long positions either through physical positions, mining stocks, or exchange traded funds.

Chart Outlook: GOLD / US Dollar

Gold Price Chart: Atlanta Gold & Coin Buyers

Currently, the price structure in gold relative to the US Dollar is showing a bullish wave pattern.  Two consecutive higher highs suggest further rallies are in store once overbought short-term indicator readings are able to reset themselves.  As long as support in the $1,200 region, the burgeoning bull rally should force itself higher to new elevated levels.  This means that it is a good idea for precious metals investors to find a gold coin appraisal from a reputable gold and silver broker.

Market Outlook

From a fundamental perspective, it will continue to be important to assess the strength or weakness that is visible in stock markets.  Many trends in precious metals are ultimately determined by what is currently happening in the stock market and since we are still trading near record levels some interesting developments could be unfolding.  In most cases, gold and silver will rally in cases where stock markets are heading lower.  So if we start to see profit-taking in areas like the S&P 500 and the Dow Jones Industrial Average, it would not be at all surprising to see further rallies in gold and silver assets.

Looking ahead, investors should remain cognizant of what is happening in the broader geopolitical climate.  Any increase in the military tensions in the Middle East or North Korea could provide additional headwinds for precious metals assets.  Key levels to watch can be found at the psychological levels of $1,200 and $1,300 and a break in either direction will be massively important in terms of the ways the market is viewing the current trajectory.  

If we see price action violations to the downside, it will imply that the latest rallies have reached a point of exhaustion.  If we see a break of $1,300 the opposite will be true and this will likely mean that we will see a major push higher