Gold, Silver, Oil Down Below Support Levels Showing Bearish Signs

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This week we watched Gold slide down toward the critical support level of $1300 per oz., and then today on Friday extended that slide below $1300 per oz settling in about $1293 per oz in trading late in the session. This is the first time in 5 weeks that Gold has closed below the $1300 per oz. level. The $1300 per oz. is a significant psychological price level and to run right through that today is a major bearish move. The main reason for this is primarily due to a better than expected preliminary reading of the GDP data which boosted the investor sentiment surrounding the US dollar. The result is that Gold ran down hard and is trading below the lowest of the entire month of February. The next significant support level set back in January is right at the $1280 per oz. level. This is the largest weekly sell-off in months. We will look to see if Gold moves back up from these lows or if it runs down to that next support level next week.

Silver, like Gold, traded down as well at the start of the week and took a nosedive on Friday to finish the week trading below $15.20 which is the major support level established back in January. The reasons for the sell-off are the same as for Gold, a strengthening US dollar on positive preliminary GDP numbers. Thursday the price broke below the $15.50 price per oz. and the next major support level is $15.20 which it broke through in Friday’s session. If it closes below $15.20, the next lower support is $15.00 which is a significant psychological price level. If it breaks lower, we are looking at a support of $14.60, if it bounces higher off this price next week, we could see prices moving back toward $16 or higher.

Oil has had the strongest start of any new year in history, but with new economic data this week strengthening the US dollar, that bullish run maybe running on fumes and at the very least is testing the strength of the rally. This week oil ended lower with US oil (West Texas Intermediate Crude) opening at $57.14 per barrel and trading late on Friday at $55.60. This drop is in spite of a mid-week rally that had oil trading back up to the highs of last week and on track to close the week out higher, before falling out of bed on Friday.

Friday’s drop also gained traction on the news that the U.S Energy Dept was offering to sell 6 million barrels of the Strategic Petroleum Reserve, flooding the system with more inventory, perhaps offsetting the cuts to production from OPEC, and may be signaling that more releases could be coming to keep prices lower as production slows down. The net effect is by raising supply and lowering the price. We will continue to monitor this and other factors affecting the price of oil.

About Bill Poulos

Bill Poulos is the co-founder of Profits Run, Inc. Bill and Gregory Poulos, founded the company in 2001 with the intention of contributing published materials, courses, and coaching on making smart investments. Bill and his wife, Karen, believe strongly in philanthropic actions and celebrating those who make a difference in their communities. They created the Profits Run Starfish Award to highlight those individuals. Bill Poulos is hoping to inspire the youth of America to become great entrepreneurs. The Pouloses live in Wixom, Michigan where they have raised 3 boys. For more up to date finance articles, follow Bill on Twitter.

Bill Poulos is an author, retired automotive executive (General Motors), and co-founder of Profits Run, Inc. Bill offers insight into the economy and trading.

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