The following comments were transmitted to Myra P. Saefong, Financial Writer for Marketwatch.com, at 7:52 AM EST.
The outlook for the Precious metals market is looking bleak as the technical picture continues to deteriorate. This may be a short-lived scenario but traders need to exercise caution. The 10-day MA crossed the 20-day MA on 10/24 and that was the first nail in the coffin for this market. Now the 20-day is dangerously close to crossing the 50-day MA and, should that occur, it may be some time before the market regains its footing. The DEC GOLD contract, down $25.00 from the 10/12 high, has been unable to hold above key technical support and is now in danger of giving back half the gain from July to October. Major support now lies in the 451-455 area with the 50% retracement level at 453.65. If the market should move into this support area, traders will be watching the market closely looking for signs that the decline is over and that a new leg up is about to begin. Should the market close below 451.00 I won't be surprised to see a quick retreat back to the July lows.
Silver is actually in better shape than Gold because it continues to trade above its 50-day MA. I expect the slide in this market to continue but it will probably not experience the same level of damage that Gold is seeing due to the fact that Silver has seriously underperformed the Gold market for quite some time.
Copper, on the other hand, remains the only market of the three that is maintaining a very healthy technical picture. The daily chart on DEC COPPER show this market still trading above the 10,20, and 50-day MA's and all the MA's have a positive slope. This is a very good sign that higher prices lie ahead. My only concern with this market is the fact that the momentum is beginning to deteriorate so I'll be watching for additional signs of an potential trend reversal.
Dale F. Doelling
Chief Market Technician
Trends In Commodities
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