by David Brady, Sprott Money:

On December 27th, I tweeted the following…

We got a definitive negatively-divergent peak on the 4-hour chart in Gold on December 31 at 1529 and appear to be heading south now.

We got a definitive negatively-divergent peak on the 4-hour chart in Gold on December 31 at 1529 and appear to be heading south now.

We saw the same negative divergence in Silver also, with the peak at 18.20.

Per my earlier tweet, I am now looking for a pullback in both metals to their respective signal lines on the Daily MACD…

As long as Gold holds 1446, I am looking for new highs above 1566 once this pullback is done.

The same goes for Silver and the prior low at 16.57. As long as that holds, I’m looking for Silver to move above 20 next.

Despite the downside in both metals near-term, I remain bullish medium-term. Gold has broken the series of lower highs and lower lows. It has also taken out its 100-day moving average at the third attempt and is now above all of its moving averages. All of those are trending higher again, and the 20-day EMA has broken back above the 50-day for the first time since October.

It is no surprise that we’re seeing the same thing in Silver:

Suffice to say that the trends in Gold and Silver have turned up again. This means that the short-term reversal in metals now underway will be short-lived and followed by a move up to new highs. There are some potential warning signals on the weekly charts once we get there, but let’s cross that bridge if and when we come to it.

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