Gold & Silver - Under Pressure

It has not been a good week for gold and silver. So far they are down -4.5% and -14% from last Friday's close.

Over the last month, gold and silver were trading in an ever-tightening range building up energy that would eventually get released. The tough part is knowing which direction that energy will take prices and when.

Entering a market when prices are compressing can be dangerous. Those that were buying silver and gold last week are now feeling some serious pain.

The move down in gold was not as extreme as silver but a correction is well underway.

Gold could move all the way back to 1770/1800 if buyers don't show up soon at the 38% fibonacci retracement level around 1825/1850.

Silver needs to find some buyers near current levels or prices could re-visit $20 and potentially the high teens at the 61.8% fibbonacci retracement that coincides with old price resistance.

What about the Gold Miners/GDX?

Gold stocks have been trading in a range since the beginning of August and have since broken down into a significant area of support around $37. We are currently seeing some demand at current levels but follow-through will be key to watch moving forward.

A close below $37 could spell further trouble for GDX as the next significant area of support is in the low $30s.

Despite the recent setback, I'm still bullish gold, silver, and the related stocks because the longer-term uptrend is still intact.

In the medium, to short term, the ride could be bumpy as bulls and bears fight for the upper hand at areas of support and resistance.

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