Source: Short Side of Long
Precious Metals sector suffered a strong reversal yesterday, as last weeks breakouts were quickly given back across the board. Gold fell by 2.4%, Silver by 2.5%, Platinum lost 1.2% and Gold Miners declined by 2.5%. The chart above shows the ongoing valuation rubber-band stretch between the overall US equity market and the Gold Mining sector, without any major trend change.
From the technical perspective, I have drawn two simple trend lines. These don’t have to mean much, but let us assume for a second that they represent current trends. From this assumption we can observe that until S&P 500 breaks down below its trend line, bulls will remain in charge. On the other hand, until Gold Miners can stage a proper breakout above its neckline, bears remain in charge.