Today MSA Research put out a detailed note for the next short-term move in the gold and silver bull markets.
Gold & Silver Bull Markets
December 29 (King World News) – Bret Oliver at MSA Research: MSA has been “pounding the table” on precious metals the past two months. Silver and gold are both breaking out of large bases on momentum, having already triggered many of our upside numbers, and they look poised for further upside in the months to come. But that doesn’t preclude short-term zig-zags…
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Our short -term metrics are pointing at the potential for a correction here. Not something prolonged, but a week or two, probably sharp and quick. As it happens, the Dollar Index looks primed for a quick spike to the upside in the coming weeks. Nothing huge, but something like 2% upside into the 106s.
As such, one should mentally prepare for some short-term downside in the metals and miners. Such a “jolt” doesn’t change the bigger picture in any way, but it’s more likely to test one’s mental resolve after such a great run the past few months (silver up to 24 from 17 just three months ago, gold pretty much unchanged on the year).
(Above charts: silver’s long-term 40-week momentum, showing a fresh breakout from a huge two-year-wide base, while price action hits the channel top for the third time since June 2021.)
Silver has been living above its short- term 3-week average for the past nine weeks, never closing a week below the zero line. It’s likely this structure will lead to some downside, possibly $1 or at most even $2. Next week that would mean trading to $22.60 or at the lowest $21.60.
This structure (dashed red horizontal line) will break with a weekly close below $23.60 next week. You could also watch the 15-day average (the same effective time frame) for a daily signal ($23.66 today but rising daily by about $0.10).
In addition, quarterly momentum has a gap it will need to fill in Q1 2023 that would necessitate trading into the low $23s, meaning trading sometime, probably in the early days of Q1 2023, to the price level where silver closed last year: $23.35…
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Finally the Dollar Index shows the clear potential for some upside in the coming weeks. The 3-week average is the pivotal level it has to close a week above: 104.57 this week, 104.34 next week. As for an upside target, it looks like it could trade into the high 106s.
If these jolts in the metals and DXY do occur, don’t be shocked; we have warned and defined potential targets. And again, we anticipate such an event would be brief. Not a long-term reversal of the uptrend in metals, nor of the downtrend in DXY.
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