Gold Prices: Pullback Ahead?

Also, our latest insights into silver, palladium, copper and more

by Alexandra Lienhard
Updated: June 09, 2017

In this new interview, Tom Denham, the editor of our Metals Pro Service, tells you why the recent price action in gold suggests to him that gold prices may be entering a risky period soon. You'll also hear his new insights into silver, palladium, copper and more.

Alexandra Lienhard:  Today, on ElliottWaveTV, I'm talking with Tom Denham, Elliott Wave International's Senior Metals analyst and editor of EWI's Metals Pro Service. Hi, Tom. Nice to talk with you again.

Tom Denham:  Hi, Alex. Good to hear from you.

AL:  So, Tom, gold's been making higher highs and higher lows since the beginning of 2017. And the same thing happened last year before a steep correction the second half of the year. So two questions for you: does it mean anything -- these higher highs and higher lows that are happening two years in a row? And secondly, do you think the market is at risk for a 2016 pullback later this year?

TD:  Well, the higher highs and higher lows in these adjacent years really fits with the broad forecast I've had, that we're having a three-wave rally. So those higher highs and higher lows that peaked back in 2016 were the first wave up. Then we had the crash down. And now we're working the second wave up. And I think it's going to go higher before it finishes. If we'd had this interview yesterday, we wouldn't really have much to talk about for a pullback. Today, gold actually came back more than I was expecting. But we're still within the range of higher highs and higher lows. And I think we're not going to see the same kind of falloff that we saw from July of 2016. I think that is going to hold off until late 2017. I think we're going to rally deep into the fall before we see really significant weakness.

AL:  And Tom, looking at silver and platinum, they're not moving as aggressively as gold, but palladium is. So is there a gold and palladium connection, or do these markets move to the beat of their own drum?

TD:  There really isn't a connection between palladium and gold. If we go back and look at a quarterly chart, they make highs at very different times; lows. Sometimes they rise together. Sometimes they're going opposite of each other. But I will say, I have enjoyed palladium lately because it's a simple forecast. It's going higher. It's going higher. It's going higher. Whereas, I've had to work more aggressively with gold, and silver, and platinum to keep up with the movements that have been unfolding.

AL:  So silver under-performance but still a bit higher?

TD:  Yes. Yes. I think that they're both on the same trite, gold and silver. Silver certainly fell much closer to the low it had formed falling off from the summer of 2016. It had looked, for a while, as if it was going to make a new low. But it stopped. And since then, it's moved up very aggressively. But it's starting from a lower level than gold. So it really is behind the curve for now.

AL:  And switching gears to the economic barometer -- copper. It's been chopping investors to bits with its seven-month range trade. Is there an end in sight? Or is it likely to see further sideways price action through the summer?

TD:  Well, you know I'm counting copper as in a triangle right now. And the most likely position within the triangle is in the fourth wave. we've? Had A, B, C, and now we're working D. And that means we've got to finish D, and move on through E before we get out of this sideways, choppy, overlapping mess. And unfortunately I think that is going to be more than a month. And it could easily be two months. And if it was three months, that would just be [SIGHS] our sad fate.

AL:  Well, Tom, it sounds like there's a lot to keep our eye on down the road. Thanks for talking today.

TD:  OK. Thank you.

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