(Kitco News) - Gold and silver posted strong losses Tuesday, and in late New York trading saw gold down over $115, basis Comex October futures. Meantime, silver was down over $4.25. Gold and silver slumped due in part to news overnight that Russia has approved a Covid-19 vaccine. However, global health experts are very skeptical and cautioning that the Russian vaccine is premature because it has not gone through full trials that the U.S. and other countries require for approval. Traders are fickle and come Wednesday morning the Russia vaccine news could be completely discredited, or at least discounted.
Also, this week it appears there is a wee bit better news on the general Covid-19 front. The U.S. daily infection rate is dropping slightly and there is now talk that the human immune system may be better than thought at developing its own resistance to the virus.
The major question gold and silver traders late Tuesday are asking is, "Was today's price action a signal that both markets have put in major tops?" Nobody knows the answer to that key question, but there are powerful technical tools that a trader can use to try to determine if and when the metals have or have not topped out.
This 35-year market watcher thinks that today's big drops in gold and silver prices are, so far, just big downside corrections in still-strong price uptrends on the charts. Price trend is the most powerful technical trading tool on the planet. Most successful traders will tell you that. "The trend is your friend" is a tried and true trading adage that profitable traders have espoused for over 100 years.
Following are price levels that are the last "reaction lows" in the near-term (daily charts) trends and longer-term (weekly or monthly charts) trends that if breached on the downside would negate the respective price uptrends in gold and silver futures markets—and very importantly be a strong technical clue that near-term and/or longer-term market tops are in place.
GOLD
Near-term: $1,805
Longer-term: $1,669
SILVER
Near-term: $22.46
Longer-term: $17.00
It's very important for a trader and investor to look at longer-term price perspectives. One day does not make or break a longer-term bull or bear market.
Trading the rest of this week will be extra critical for both gold and silver markets. How the markets close on Friday will be very telling. If gold and silver futures prices close on Friday at or near their weekly lows, then such would be a significant early clue these markets have put in at least near-term tops. If the markets can recover over the next few days and finish the week well off of their weekly lows, bulls could be back in business soon.
It's this market watcher's opinion that the fat lady has yet to sing in the gold and silver markets' big bull runs.
