Gold and silver have shown strong performance over the last two years as investors gear up for the coming recession by moving capital into the precious metals – commonly used as a wealth preservation technique during an economic crisis.
Although the recession is only just getting started, these assets may already be due for a strong correction, according to an incredibly accurate sell signal from an indicator designed by a world-renowned market timing expert.
Gold and Silver Rally Could Be Tarnished By TD 9 Sell Signal on Futures
Precious metals have spent the better half of the last two years in a slow-building uptrend, in preparation for the recession that was coming, and is now here.
Gold and silver had been strongly surging at the start of the year, but like all assets, a massive selloff as the coronavirus peaked caused these precious metals to crash.
Related Reading | Silver, Gold and Bitcoin: Even Safe Haven Assets Cannot Withstand The Coronavirus
Later, the two had a strong recovery, and gold has recently reached a new 7-year high after a 7% gain in April thus far.
But these rallies could already be coming to an end, or at least a temporary pullback, according to an accurate sell signal issued by the TD Sequential indicator, created by Thomas Demark.
The TD Sequential indicator issues a signal after 9 consecutive candles in a series meet specific requirements. The tool has been used to accurately call many tops and bottoms in crypto, including Bitcoin’s peak at $20,000, the bottom at $3,200, and the recent top at $10,500.
In other financial markets, the tool is just as reliable. Now, the signal just appeared on both Gold and Silver Futures.
With Recession Looming, Any Dips are For Buying
While the accurate sell signal does suggest a pullback in gold and silver, any dips are for buying as the precious metals are likely to continue to rise in the current economic climate. The Fed printing more and more fiat lowers the value of money, while hard assets like gold and silver rise in value.
Gold may already be up 7% this month, tapping new 7-year highs, but it still has plenty of fuel in the tank according to other technical analysis indicators. And with supply so restricted due to the pandemic-related shutdown, demand is only further outstripping what’s available to investors.
Related Reading | Gold Taps New High, Indicators Show Rally Has More Fuel in the Tank
The RSI is sloping upward, and the Directional Movement Index is diverging, showing that the current uptrend is only growing in strength.
The indicators don’t rule out a short-term pullback, which given the momentum behind gold, could be a profitable chance to buy at lower prices.
Featured image from Pixabay
