(Kitco News) -
Gold and silver prices fell to multi-year lows in December. Not
coincidentally, so did Nymex crude oil futures. Crude oil has led a
“bust” in the raw commodity sector that has been playing out for the
past three or four years–depending on the specific market. Most of the
raw commodity sector, including the precious metals, will continue to
follow the lead of crude oil. When crude oil bottoms out, it’s very
likely many other commodity markets will do the same.
One bit of good news for the raw commodity bulls is the major bear
market in crude oil is mature and the vast majority of its price
pressure has already occurred. To put it another way: It’s likely there
is not much downside price potential left in crude. Nymex crude oil
prices bottomed out in 2009 at around $33.00 a barrel.
See on the monthly continuation chart for nearby gold futures that
prices have dropped below the key 50% Fibonacci retracement of the move
from the
2001 low to the 2011 high. That adds to the overall very bearish
chart posture for gold. I would not be surprised to see gold challenge
$1,000.00 an ounce in the coming few weeks or few months, before putting
in a major bottom shortly thereafter.
Nearby Comex silver futures hit a high of $49.82 an ounce in April of 2011.
However, the past 4.5 years have seen this precious/industrial metal
trend sharply lower and lose over two-thirds of its value. In 2015
silver prices dropped below $14.00, and it appears there is still more
downside price potential in the coming months. The longer-term monthly
continuation chart for nearby silver futures shows strong chart support
does not show up until around the $10.00 area. For the bulls to gain
some significant longer-term technical strength they would have to push
prices back up to the $18.00 level, which would break the longer-term
price downtrend in the silver market.
By Jim Wyckoff, contributing to Kitco News; jwyckoff@kitco.com
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