Gold Analysis

Gold continues on its downside. As indicated earlier i had expected gold to continue till around 3rd quarter to weaken. Particularly during these months before the festivities of Diwali and the marriage season following it, gold has shown a tendency to weaken. Looking at the channel chart below one can see that Gold has just about neared its bottom. It might possibly touch 1050 to end the downside.

If we look at the below chart and check the retracement levels from the start in 2001-2002 when the market went into a bull run to the top made in 2011 we can see that market is still above the 50% level which makes the case for moving up for gold stronger then silver. 

If we look at the daily closing on Friday we can see a double bottom and furthermore that double bottom is with a divergence. That makes a further pull back on Wednesday once Fed meeting result is out a possibility.

Lastly one can see the chart below and a good entry point would be if the market closes above 1125 this month. That would be another signal that gold is bottoming out and unlikely to test the low of 1179 it made earlier this week. However a close below the horizontal line, and a test of 1080 or even move to  1050 cannot be ruled out.

Silver Analysis

Silver like gold and other metals has been on a down side move for a long time. The wave count chart below that i have provided indicates that Silver is about to find a low and the correction waves of a, b and c are about to end. The trendline has been holding such that we need silver to go below 13.40 to consider an upmove an uncertainty in the near future. Silver down movement is also coinciding with the month of August -September which is the 3rd quarter of the year and as i stated earlier, i would expect dollar strength to start waning around the 3rd quarter or so. After the correction starts wave 1 and then correction of 1 is wave 2. This is usually a consolidation phase or accumulation as some people like to call it. So a really good time to enter the market in silver would be around the end of 1st quarter next year, until and unless one is comfortable with holding a position over a long period of time. A good strategy is usually to focus on waves 3 and 5. I have indicated a possible movement for wave 1 and 2 unfolding over the next 6 to 8 months.

The Next chart indicates the retracement levels and as the market has gone through the 61.8% retracement level, the market will need at least 4 to 6 months to consolidate and gather strength for an upmove. It would be best to avoid trading wave 1 and 2, be patient and look at silver next year to capture wave 3.