Why now may be a good time to take 'opportunistic' profits in gold and silver

By Myra P. Saefong

Gold, silver charts show 'upside exhaustion': BTIG

Gold prices have climbed to their highest on record and silver recently touched a more than 11-year high, but both may be ready for a pullback in the coming weeks as daily charts for the precious metals show what one technician referred to as "upside exhaustion."

On the futures market, gold for December delivery (GC00) (GCZ24) climbed to an intraday record high of $2,694.90 an ounce on Comex Wednesday and marked an all-time settlement high of $2,684.70, according to Dow Jones Market Data.

Silver on Tuesday saw its December contract (SI00) (SIZ24) settle at $32.43 an ounce, the highest most-active contract finish since December 2012. It eased back a bit Wednesday to settle at $32.02.

In a note Wednesday, Jonathan Krinsky, chief market technician at BTIG, said he remains "constructive" on precious metals over the next six to 12 months, but there are "tactical opportunities that present themselves, and we want to be opportunistic so that we can add into weakness."

With spot gold prices up roughly 29% year to date and spot silver up 34%, we are at "one of these inflections," despite the metals' constructive momentum and trends, he said.

Read: China stimulus plans spark a commodities rally, but a global soft landing still isn't a sure bet

Daily charts are showing "upside exhaustion," and the weekly chart is showing "negative momentum divergence in overbought territory," said Krinsky.

The BTIG market technician pointed out that October has been the second-worst month of the year for gold over the last 25 years, with that month averaging a decline of 0.32% in prices of the metal. The month of March has been the worst month for gold, averaging a 0.71% retreat over the last quarter century.

A pullback for the gold-backed SPRD Gold Shares exchange-traded fund GLD into the 225 to 234 zone, which would roughly mark a 5% to 8% pullback, would be a "timely spot to re-engage," said Krinsky. In Wednesday dealings, GLD was down 0.3% at 245.28.

Krinsky said the iShares Silver Trust ETF SLV has yet to fully breakout above its May highs. "While you could argue that [there] is still fuel to move higher, out thinking is we see this pullback into October and then you look to add into that dip in anticipation of a bigger, more durable breakout," he said. The ETF was down 0.3% at 50.1453 in Wednesday dealings.

-Myra P. Saefong

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09-25-24 1409ET

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