by David Brady
Precious metals and miners continue to go sideways-to-down for now. This makes sense after strong rallies in each, and it facilitates a reset of the overbought and bullish conditions to enable the next rally to new highs.
However, there is a small but not insignificant risk of a deeper dive across the board if we see a spike in bond yields and/or a dump in inflation expectations triggering the break of key support levels. Although the probability is low right now, the magnitude of the risk to the downside means we need to be mindful of it.
Gold is still trapped in its wedge with the risk of a false break to the downside. However, if we break to the upside, it’s going to new all-time highs, imho. Much of the overbought condition at the peak in April has been reset, but it could go a little lower, providing the necessary fuel for the next rally.