Escalators or Trapdoors Dead Ahead | Technical Analysis

Weekly Gold Analysis – Is a Correction Coming?

Gold Price - Weekly Chart

Gold has rallied hard since November 2024, when Trump was elected President. Perhaps it is because of his inflationist tendencies, which are good for Gold, or his tariff policies, which could be driving the cost of imported Gold and Silver higher. Or is it the Chinese vacuuming up every ounce they can get? Whatever the reason, it has been one-way traffic since then.

While there is no evidence that the peak is in place yet, nothing goes up in a straight line forever. Gold has had a fantastic run and it may continue, but the bigger the rally, the bigger the fall. The weekly momentum indicators are all screaming trouble. However, the trend remains strong, and until we get a lower high followed by a lower low, there’s no need to even consider that the trend has ended. At the very least, Gold would have to break $2844, but more importantly, the former high at ~$2800, now support. A breakdown out of its upward trending channel would seal the deal. Until then, the rally remains intact.

Key Price Levels to Watch in Gold

If we break $2960, then $3050 is the next target. However, if Gold breaks $2844, then $2700 is the primary target.

How Inter-Market Analysis Impacts Gold and Silver

Inter-market analysis is just one of the tools in the FIPEST process. In this case, it focuses on markets that are far greater in size than Gold and Silver and have a history of being consistently correlated to the smaller precious metals market, be it a positive correlation or a negative or inverse correlation. When the correlation is high between the two markets, positive or negative, the bigger market can have a great deal of influence on the smaller market. In other words, the bigger market can dictate the next direction of the smaller market.

There is one caveat. Correlations can and do break down for periods of time, as this one did in 2022. It’s only when the two markets are highly correlated that inter-market is useful, as it is now.

TIP is the ETF for Treasury Inflation Protected Securities. It is basically the inverse of real yields. When TIP goes up, real yields fall, and Gold rallies. Said simply, Gold is positively correlated to TIP.

Bond ETF

As you can clearly see in the chart above, TIP is highly correlated to Gold. The correlation coefficient is a steady 0.74 to 0.80. They bottom together and they peak together. The Treasury Bond market is exponentially greater than Gold, which means TIP is the dog and Gold is the tail.

TIP is negatively divergent on both the weekly RSI and MACD Line, coming off extreme overbought conditions. The price is turning down. If this continues and the correlation holds, then the risk-reward profile is bearish.

Silver Price Levels – What to Watch

Silver Price 

As long as Silver holds $31.50, I’m only looking up. But a break and close below $31.50 would signal a breakdown. Then we would be looking for a test of critical support at $29.15, the low on December 19.

GDX and Gold Miners Outlook

GDX - Gold Miners ETF

As long as $38.50 remains intact as support, GDX could go a lot higher. A break of $42.66 would likely kick the rally into high gear.

My preferred, consistently high-beta miners would be IAG and HMY.

Conclusion – Stay Bullish but Be Prepared

I remain long-term bullish by holding the majority of my holdings in physical Gold and Silver. I just let it ride. Typically, I use my trading account to hedge my positions or take advantage of ideal set-ups one way or the other. Based on the levels provided, there are plenty of opportunities ahead in both directions.

Buy gold and buy silver today to secure your financial future.