2020 has been a roller coaster for the global economy, and the precious metals markets were not spared. Gold and silver markets have been quite volatile in recent months with gold recording its all-time high in early August.
But, as much as most think that silver, gold, and platinum are buys, there is one basic thing that investors must understand; the trend in metals is always lower until it is proven otherwise. Since its peak in August, the trend for gold has been lower. Please note that trends are valid until they are not.
As it was seen from late last week and early this week, silver, gold, and platinum reached resistance levels and failed to break above them. Their next step naturally is to test support. When they reach the nearest support, these metals will either bounce back and rally towards the resistance or breakdown and continue with their downtrend.
Mechanical traders are advised to watch the trend and avoid reacting to short-term volatility. Emotions should never dominate the investing and trading worlds. They are mostly wrong and miss the logic of trading.
The price action dictates what the markets should expect next. In the current consolidation pattern, analysts and commentators expect a breakdown through several supports to sustain the downside trend. Thus, for now, investors are advised to sell until the bottom of the trough is reached. Then, they can buy again as the metals rise again.