The dollar is getting ready for a sizable rally, and that means that gold and silver are going to be knocked back again. Longer-term however, the outlook for the Precious Metals could scarcely be better, as we will see. In last weekend’s update it was pointed out that gold’s gap breakout from its steep downtrend shown on its latest 6-month chart below was probably false and that it was expected to drop back as the dollar advanced, which it duly did last week. Bearing in mind that the dollar has about completed its Head-and-Shoulders bottom, it is now clear that a parallel Head-and-Shoulders top is completing in gold as shown on the chart. This chart projects a breakdown beneath the nearby support level to be followed by a drop targeting the quite strong support in the $1200 – $1215 area.

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