The world of precious metals trading has remained relatively calm since the forecast I shared for the potential trajectory of gold prices looking forward to August 2025. In light of the scant changes, this edition will serve more as a supplementary note rather than presenting any significant updates—there simply hasn’t been substantial movement to warrant a full-fledged commentary.
However, there is one aspect of the financial landscape that commands attention. The closing session of the previous day witnessed a minor downturn in the VanEck Vectors Gold Miners ETF (GDX), albeit by a mere $0.14. While seemingly trivial, this downturn took place immediately following a moment when this ETF came tantalisingly close to surpassing its 2011 peak, missing it by just $0.12. This proximity to historical highs prompts speculation about whether we are on the cusp of a significant market turning point.
Indeed, in the last alert focused on gold trading, I delved into the critical nature of current resistance levels, both for this ETF and its junior counterpart, as well as their relationships with global financial indicators such as the US Dollar Index. I outlined why, under the current market conditions, smaller entities like GDXJ and Newmont Corporation (NEM) might face steeper declines compared to GDX. The analysis was intricately tied to the broader economic context, drawing comparisons with the market situation in 2011.
Turning our gaze to the US Dollar Index, despite facing a correction this week, its performance remains robust. The long-term outlook for the dollar is positive, building upon previously shared analyses. Even with recent market fluctuations, the dollar’s support levels—a key indicator of its stability—continue to hold strong. This resiliency is made evident by its rebound from the thick support line, indicated by daily closes, as well as its recovery above the dashed line marked by intraday lows.
In a broader market context, other commodities like platinum and copper offer insights into potential market trends. Platinum, often referred to as “the little silver” due to its Spanish nomenclature, has experienced a partial correction, recovering 38.2% of its recent decline. However, repeated failures to maintain this recovery level suggest a potential head-and-shoulders formation, traditionally seen as a precursor to a downturn. Should platinum break below the $1,310 mark, this could be a harbinger of fresh monthly lows, potentially breaching the lows observed in May.
Copper’s market behaviour presents an interesting pattern, currently exhibiting consolidation in what can be described as a classic flag formation. Such patterns historically precede movements akin to those observed before the pattern’s formation, hinting at the likelihood of a notable downturn in the near future. This projection has implications for positions in Freeport-McMoRan (FCX), suggesting that those betting on a decrease might see substantial benefits.
The interconnected nature of commodity markets means that significant changes in the copper market often signal impending movements in the prices of gold and silver. As for FCX, despite potential short-lived rallies, the expectation is a pronounced decline, possibly dipping as low as $24 in the months to follow. This anticipated movement draws parallels with the dramatic fall observed during the 2008 financial crisis when precious metals and equities tumbled together.
Furthermore, looming tariffs could exacerbate market declines, concurrently dampening demand for commodities like copper. This scenario is supported not only by technical analysis but also by fundamental factors, reinforcing the projection of a downturn. These assessments, coupled with the striking similarities to conditions observed at the 2011 peak and the formidable resistance encountered by mining stocks recently, suggest that a period of market contraction may be imminent.
In conclusion, while the recent period has seen minimal fluctuations in the precious metals sector, a closer examination reveals undercurrents that may signal significant market shifts ahead. The interplay between gold prices, ETF performances, and broader economic indicators like the US Dollar Index and commodity market trends underscores the complexity of predicting market movements. As we look to the future, keeping an eye on these dynamics will be crucial for navigating the potentially turbulent waters of the precious metals market.
