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U.S. Gold reversed direction on Friday after falling for four straight days. The metal's rise was impressive -- gold gained $21.20, or 1.44%, to close at $1,495.10 an ounce. Gold prices hit an intraday low of $1,470.90 and a high of $1,497.90 an ounce. Last week, gold hit an high of $1,560 an ounce.



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Gold prices are well below its Bollinger band's middle band. Friday's impressive rise of $21.20 an ounce, could still not get gold prices above Bollinger band's middle band. The relative strength indicator is sitting at 51.84. Technically, gold is neither overbought nor oversold on a daily chart. Bears have an advantage over bulls and their next near-term downside price objective is closing prices below solid technical support at $1,477.80.

Silver futures prices for May delivery, now the most active contrast, dropped a whopping $14, or roughly 25% for five straight session last week. Friday brought a relief, Silver prices rose $0.93, or 2.68%, to close at $35.60 per ounce on the Comex in New York. Silver prices hit an intraday low of $33.15 and a high of $36.39. Silver prices gave up all the gains from April. Currently, Silver prices are just below its Bollinger band's lower band. The relative strength indicator is sitting at 34.87, which represent an oversold condition.

In my opinion the long term bull trend in precious metals is still intact but silver has further downside risk. Gold on the other hand will remain relatively well supported due to intact fundamentals, lower dollar, high inflation, negative interest rates and other geo-political risks. Silver said to be poor man's gold, is mostly the realm of retail investors. Some data suggest that retail investors are still invested in Silver, while hedge funds, often called the smart money, has left the trade. I have no doubt in my mind, that investors will have an opportunity to buy silver at lower prices. But for a trade, best risk reward is provided by getting long exposure to Silver.

If you believe in the gold and silver story, you can take advantage of the climb in gold prices by getting long exposure to GLD (iShares Gold Trust) or UGL (ProShares Ultra Gold). You can also benefit by getting short exposure to GLL (ProShares UltraShort Gold). You can take advantage of the climb in silver prices by getting long exposure to SLV (iShares Silver Trust) or AGQ (ProShares Ultra Silver). You can also benefit by getting short exposure to ZSL (ProShares UltraShort Silver).
Source: What's the Next Trade for Precious Metals?