Gold & Silver Forecast (21 May 2024)

Gold Forecast: Has a Wild Ride on Monday

• The gold market shot higher during the Monday trading session, as news got out that the Iranian president was killed in a helicopter crash.
• Initially, people thought that perhaps it was some form of terrorism or a military strike, but at the end of the day, the market has to deal with the fact that sometimes, it’s just a weather-related a bit in a dangerous part of the world.

Because of this, the market sold off quite drastically, and could have potentially destroyed several retail accounts during the session. I suspect that a lot of people solve the spike above the resistance barrier and went “all in.” This of course is a market that has a lot of FOMO attached to it, but at this point, I think this is a market that is getting a little overdone.

Technical Analysis

The technical analysis suggests that we are about to see a bit of a pullback, due to the fact that we are trying to form a shooting star. Underneath, we have the $2400 level, which should be a significant amount of support due to the fact that it is a large, round, psychologically significant figure, and an area where we had previously seen a lot of resistance. This makes sense, due to the fact that the market has been so overbought, but at this point in time we could get an even deeper correction, perhaps as low as $2300 where the 50-Day EMA is coming into the picture.

However, the exact opposite could happen, and we could get a massive shot higher. If we can break above the highs of the trading session on Monday, that could lead to another impulsive leg higher. Either way, I do think that it is only a matter of time before we go higher, but I also recognize that this is a situation where we are simply far too bullish to try to short this market, and I look at each time the market falls as a potential opportunity.

Silver Forecast: Sees Massive Swings

• The silver market initially shot higher in the early hours on Monday, reaching the $32.50 level before collapsing again.
• At this point, I think we have a lot of different things moving the market at the same time, and you have to be very cautious about what you're doing here.
• Silver is overbought and even hit well above the 70 level on the relative strength index, actually touching 78.

This tells me that there is high potential for some type of significant pullback. If we fall from here, then it's likely that there are plenty of buyers maybe near 30, but maybe $28.50 level.

A short-term pullback is a potential buying opportunity in the market that's very strong, but these short squeezes are something that are very difficult to get a grasp on. You never really know when they're going to end and when they do, they normally end in tears.

I remember the last silver short squeeze, the last real one where we got above $30 and pretty much every retail trader I know got wiped out because they tend to over invest in the market. They most certainly stay too long. The action that we've seen in the morning has probably wiped out an untold number of retail accounts. After all, we hit $32.50 and then dropped below the $31 level in the European session. It's hard to tell what the Americans will do with this, but at this point in time, it certainly looks like a breakdown as possible.

Massive Danger Currently in this Market

In fact, I just pulled up the charts, and we're down 30 cents since I started doing my analysis of silver. Long story short, I think the analysis and silver is you needed to pull back rather significantly and stabilize if you want to get involved. If you're already long of silver, and I suspect many of you are, do not get married to this position. It might be time to move your stop losses closer to the price action.

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