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A Bounce in Precious Metals Could be a Reversal | RJO Futures

Posted 05/16/2017 11:07AM CT | Frank J. Cholly

Last week I wrote an article about trying to call a bottom in metals, “Is it Too Soon to Call a Bottom in Metals”. While I am encouraged by the bounce in the precious metals, some others may see this bounce as a selling opportunity. The market may have to go back and test last week’s low one more time. This bounce is mostly technical with a touch of safe-haven flavor. Geopolitical pressures from North Korean missile launches and cyber-attacks on a global level have created more market uncertainty. Gold is typically the leader in precious metal rallies, however, this bounce seems to be led higher by the silver market. Platinum is also showing a potential trend reversal today. The closing price is still the most important price of the day. The story is always about where the market settles at the end of the day.

Today should either confirm a reversal with a close above yesterday’s high or perhaps as the day goes on the bounce loses momentum. I believe today’s close in the metals will set the tone for the rest of the week. If August gold futures can manage a close above $1,240 that would encourage the bulls in the market to get more aggressive and challenge the $1,250 to $1,260 range. July silver needs a close above $16.80 and then I would expect a run back to the $17.00 level. As far as platinum goes I would expect a test of the $950.00 level. Platinum is, in my opinion, the most undervalued of the three big metal contracts.

 

Aug ’17 Gold Daily Chart 

Aug '17 Gold Daily Chart

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Frank J. Cholly

Senior Market Strategist
Frank brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.
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