By: Jay Taylor
Gold: Closed at 1342.10 -3.50 finding new support and resistance at 1342.50. Momentum is weak and continues lower signaling more selling ahead. New nearby support is 1338.50-1332.50 and then our forecast low at 1325. If and when this selling cycle is completed, we forecast a new mini-rally taking gold back to 1407. Then, there could be more, mild selling before a larger rally in later March-April. We are expecting gold to touch 1,607 on an annual high but do not know whether this comes in the first half of 2011 or in the later fall. Next week we forecast gold will be trying to reach 1325 for a new base followed by the next rally.
Silver: Closed at 27.48 -0.07 with price dropping under the 50-day moving average at 28.08. Momentum is falling wider and faster as silver is a faster mover. The chart pattern has shown a full five wave sell-off. Now that the 50-day is broken we see new price support at $26.48 and $25.08. The 200-day average is way back at $23.20, which is always a possibility but we are not expecting that price on this cycle. Silver prices can move $1.50 in one trading session. We have seen it lately more than once so we cannot discount any major moves on the event. Expect a drop to $26.48 next week and then we’ll see what new set-ups and charts look like on the weeklies.
U.S. Dollar Index: Closed at 78.15 -0.67 on falling momentum and weakness in bonds and credit; world-wide. The dollar is going to stay down as it’s beneath all moving averages and fundamental credit moves coming from the Federal Reserve encouraging more selling. However, the dollar has hard support at 78.00-77.50, we’ll see next week how much pressure it can endure from a rising Swiss, Euro and Canadian currencies. We forecast a dollar index price next week of 77.50.
All Things Considered – John’s Commentary
Remember not to focus on day to day price fluctuations. Keep the big picture and your long-term goal in mind.
