Next week is shaping up to be pivotal. The previous Fed rate hikes were positive for precious metals. However, they were greatly anticipated and spaced 12-months apart. Effectively it became a “sell the rumor and buy the news type event.” Gold traded lower before each rate hike, and the technicals were oversold. Prices bottomed within a few days of the rate increase.

This time is a little different. The last increase was just 3-months ago, and gold prices aren’t nearly as oversold. Therefore, it is unclear how they will react to another hike. The probability for an increase is sitting around 90%.

The previous rate hikes (see charts), drove gold lower the day of or the day after the official announcement. Miners had mixed results. The 2015 low was undercut in January of 2016.

What does this mean for investors? Tread carefully. We are entering a period of increased volatility, and extreme leverage could be dangerous.

I’ve highlighted resistance levels in the charts below. Prices would have to reclaim these levels to eliminate the bearish potential. Until then, I will remain cautious and roll forward my oil position.

-DOLLAR RATE HIKE HISTORY – The dollar topped 2-4 weeks after the previous rate hikes.

-US DOLLAR- The dollar closed below the 10-day EMA and prices look soft. However, the previous rate hikes immediately strengthened prices.

-GOLD RATE HIKE HISTORY- Gold prices rallied after the previous rate hikes. Prices bottomed the next day. However, each bottomed arrived during firmly oversold conditions (MFI and Stochastics above). Neither are oversold currently.

-GOLD RESISTANCE- Resistance box for gold.

-SILVER RATE HIKE HISTORY- 2015: Prices bottomed 2-days before the increase but promptly retested the $13.62 bottom the next day. 2016: Prices spiked lower the day after the increase before finally bottoming at $15.67.

-SILVER RESISTANCE- Resistance box for silver prices.

-GDX RATE HIKE HISTORY- 2015: Prices bottomed the day after the hike, and rallied for 13-trading days before sinking to a new low. 2016: Miners dropped the day of the hike significantly, and bottomed 4-days later.

-GDX RESISTANCE- Most countertrend rallies top between the 50% and 62% retracement levels. Prices would have to rally through the 50-day EMA, beyond the retracement box, and close above the breakpoint to restore the bullish trend.

-GDXJ RATE HIKE HISTORY- 2015: Prices bottomed the day after the hike, and rallied for 13-trading days before sinking to a new low. 2016: Miners crashed the day of and bottomed 4-days later. Note: The Stochastics was oversold leading into the December 20th low.

-GDXJ RESISTANCE- Prices would have to rally through the 50-day EMA, beyond the resistance box, and close above the breakpoint to restore the bullish trend.

-SPY- Prices tested the 20-day EMA and made a swing low. The previous rate hike saw a brief consolidation before rallying to new highs.

-WTIC- Prices closed below the 200-day MA and I’ll add to my short positions if we get a bounce. I expect a test of the $42.20 low and potentially lower.

Miners rallied into the Friday close, and we likely have a daily cycle low. However, anything is possible before a FED rate hike. Their decision and subsequent remarks could shift prices violently.

Metals and Miners are due for a bounce. The strength and durability of said bounce will determine the near-term (2-3 month) outlook. Expect several updates throughout the week.

Note: There was Selling On Strength numbers in GDX.