Miners Lead the Precious Metals Sector Lower
Last week and early trading today confirm the earlier analysis. Mining stocks have dropped and are dragging the whole precious metals sector down.
The GDXJ index is testing its lows from late October. However, gold and silver prices are not falling to those levels. The stock market is stable today and is not causing this drop. If it were, both miners and silver would be affected equally.
This shows mining stocks are underperforming. This is a negative sign for the coming weeks. Watching miners has been a reliable way to predict gold’s direction.
The GDXJ fell from over $110 to below $90 briefly, but this may be just the start of a bigger decline. The overall stock market remains near all-time highs and has not dropped significantly yet. This, combined with the potential strength of the USD Index, adds bearish pressure on miners and metals.
USD Index Rally and Metals Outlook
The USD Index had a clear monthly rally in October. Many investors still believe that the USD is weak, but this view creates good buying chances. People often ignore bullish signs for the USD, similar to how stocks were avoided after the Covid crash.
Tariffs should boost the USD, but it fell after tariffs were announced in April. The USD is expected to rise back to April levels and then higher.
Gold appears to be forming a short-term top near its resistance area, similar to late October’s triple top. Now, there may be three or four tops forming. Once the USD Index rally is clear, gold is likely to drop sharply.
Silver is correcting its recent fall and showing a symmetrical price pattern. Some see a head-and-shoulders pattern forming, indicating a possible decline in silver prices soon. While silver looks weak in the short and medium term, the long-term outlook remains very bullish.
Warning Signs for Bitcoin and Cryptocurrencies
Bitcoin recently broke below a key support line and confirmed this by failing to move back above it. It also failed to reach new highs. These are strong sell signals.
With the USD Index set to rise, these signals suggest it is a good time to exit bitcoin and most cryptocurrencies while prices are still high. Crypto holders should treat this as an important warning.
Prices could fall quickly when more investors understand the USD’s strength. Profiting from long-term holdings and some gold and silver investments made earlier was a smart move.
When the USD Index breaks above 100 clearly, many bearish USD traders will be surprised. October showed a strong monthly reversal in gold near the predicted target zone, supporting these points.
In summary, gold and silver had strong rallies, but these appear over. This creates unique new opportunities for investors.
