Trading Gold, Silver, Platinum and Palladium

Gold – A medium term correction of a long term uptrend

The price of dollar denominated (spot) gold remains in long term uptrend, as evidenced by the price trading firmly above the 200-day simple moving average (blue line). Since September 2019 we have seen a correction of this uptrend, marked with the downward channel on our chart above. The short to medium term correction of the longer-term uptrend is also further noted by the 20-day simple moving average (red line) trading below the 50-day simple moving average (green line).

Trend followers would look for long entry from the current short to medium term downtrend (correction). Long buy entry considerations might present themselves in one or a combination of the following scenarios:

1. The 20-day simple moving average (MA) crossing above the 50MA

• This would need to occur before the 200MA is crossed by either of these (20 or 50) moving averages
• This would suggest that the short to medium trends have finished correcting and are now aligning with the long-term uptrend as we resume longer term gains

2. A price breaking above short-term resistance at 1480

• Price is a leading indicator and might give an earlier indication of the short to medium trend reversing up through a break of resistance
• A strong breakout is likely to be confirmed with a bullish cross of the 20 and 50 MA’s shortly thereafter

3. The price trading to support of the 200MA

• The 200MA is a gauge of long-term trend and often see’s the price reverting back to it as it acts as a type of mean
• Traders with a longer-term view might look for a bullish price reversal around the 200MA support level as an opportunity to buy the commodity at a more favourable price level than is current

Should the long-term uptrend resume (as suggested) upside resistance targets are considered at 1515, 1535 and 1560 respectively.

Silver – price action mimmicking that of gold

The price of spot silver has behaved in a similar fashion to that of gold in that the long term trend remains up, although we have seen a correction of this trend ensuing since September 2019. Trend followers might look for long entry on a break above resistance at 17.30 or a bullish reversal off the 16.60 level. A cross of the 20MA (red line) above the 50MA (green line) would be a further confirmation of short to medium term trends aligning with the longer term uptrend. Should the price of spot silver instead move to start trading firmly below the 200MA (blue line) the long term uptrend would no longer be considered valid.

Platinum – a broader sideways consolidation

While the long-term trend remains up for the spot price of platinum (as the price trades above the 200MA), the short to medium term trend remains sideways for the commodity. The short to medium term sideways trend also serves as a correction to the longer-term uptrend and is noted by the price whipsawing through the 20MA (red line) and 50MA (green line).

Traders aligning with the longer-term uptrend might look to a bullish price reversal before the 870-support level for long entry, targeting a move back to 925. Alternatively, a break above the 925 level could also provide a long buy entry and target further gains towards the 955 level. Should the platinum price instead move to close below the 870, the long-term upward trend would need to be revaluated.

Palladium – buying the dips

Palladium has been among the outperforming precious metals in terms of gains in 2019. The short medium- and long-term trends remain up for the commodity. Trend followers might consider keeping a long bias to trades on palladium, targeting an eventual move to channel resistance at 1940. Short term pullbacks towards channel support and still above the 1750 level could provide traders with further long entry opportunities, while a close below the major low at 1685 would see a long bias no longer favoured when trading palladium, as it would signal a break of the uptrend currently in place.