Gold and Silver are testing the boundaries of our analysis. It is not unusual for precious to push the limits both technically and cyclically. Nonetheless, gold has rallied further than I anticipated. If miners were booming higher, I’d accept the 6-Month low for gold arriving on May 9th at $1,214.

The HUI:GOLD ratio (see chart) depicts the underlying trend in precious metals. In a robust bull market, miners will outperform metal prices. This ratio has been consolidating for several months, and the pattern looks vulnerable to additional weakness.

Gold prices advanced higher from the bullish pennant, and we could see a little more upside next week. I will be looking for a top on or before Friday’s employment numbers.

-US DOLLAR- Prices closed at the minimum level to form a swing low. Closing above the 10-day EMA is the next step in confirming a bottom. If the dollar is following the 1999 setup, we should see a sharp rally above the trendline within the next 2-Months.

-GOLD WEEKLY- When markets test my resolve, I go back to the basics. Fundamental cycle analysis suggests we should see at least one failed daily cycle before price reaches an intermediate 6-Month low; we haven’t seen that. Consequently, prices should drop below $1,214 before bottoming.

-GOLD DAILY- Prices broke higher from the bullish pennant. A top is likely between Tuesday and Friday of next week. Prices should then break this trendline before reaching a 6-Month cycle low. We should see at least one failed daily cycle (price falls below the previous cycle low).

-HUI:GOLD RATIO- The HUI:GOLD ratio has made lower lows, and lower highs since February and the 200-day MA has turned down. This ratio would have to breakout above the trendline and subsequent 200-day MA to launch the next bull market advance. The underlying weakness doesn’t support a low in gold.

-SILVER WEEKLY- Prices are meeting resistance at the 20/50 week EMA crossover. Prices should top with gold next week.

-SILVER DAILY- Prices retraced 50% of the sharp downswing. They could rally to the 200-day MA and 62% retracement, but I think the countertrend rally will end next week.

-GDX- Prices fell just short of making a swing low. They need to close above the trendline or below $22.50 to break free from the consolidation zone.

-GDXJ- Junior miners would have to close back above $32.50 to initiate a bounce.

-SPY- Prices could consolidate for a few day’s, but I think they will continue toward the 246+ target.

-WTIC- Oil bounced Friday, and it would take consecutive closes back above the 10-day EMA to repair the damage from Thursday. However, the odds favor a test of the $46.00 level or more. I may look to short next week if a setup appears.

-XLE- I will remain predominately bearish on oil and energy stocks until there is a clear breakout in the XLE.

Overall our forecast for lower prices remains. Gold and Silver rallied longer than anticipated. However, the action in miners and the HUI ratio still favors lower prices. If gold tops next week, it’s unlikely prices would reach the 6-Month low by mid-June. I would then look to late June or early July for a more reasonable timeframe.