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Consolidation On Bullion Trade

Headlines and Open Positions:
News wires are still covering the increase in bullion margin requirements required to hold positions as a reason for recent price declines, as price action indicates that a volatile period of price consolidation may be seen.

Trade desk updates recently highlighted the potential for choppy consolidation in bullion, and in GLD and SLV, the exchange traded funds (ETF’s) that track bullion momentum. Those moves look to now be forming a base that is currently holding well as support.

Any existing gold or silver positions should be monitored while recent price action is absorbed. There have been very few clear-cut signals in the bullion market recently.

Bullion Price Action:
Strong buying activity was seen at 1490 on gold, and at 33.00 on silver in April and May. These areas (swing points) will be closely monitored, as it does seem that they are allowing a strong base to form.

Main gold support: 1470. Main gold resistance: 1520.
Main silver support: 32.50. Main silver resistance: 37.50.

Daily trading range is $19 on gold and $1.20 on silver, which are above the historical norm and indicate that speculative interest is still high. 

ETF Price Action:
Strong buying activity was seen at 144.50 on GLD in April, and at 32.50 on SLV in March.
These areas (swing points) will be closely monitored and market alerts sent to subscribers if they break.

Main GLD support: 144.00. Main GLD resistance: 151.50
Main SLV support: 31.50. Main SLV resistance: 37.50

Technical Correlations:
50-day Simple Moving Average (NYSE:SMA) on gold is at 1470, with the 100-day SMA at 34.80 on silver. Gold bullion has a 12-month 90% correlation to the euro (Eur/Usd) currency pair.

Outlook:
A buying signal will form if gold closes the week above 1530, and could be sustainable if global equity and risk markets reverse a recent bout of negative sentiment. Silver has not shown any desire to move too far from current valuations, as fair value looks to have been found.
 
Sentiment and outlook towards bullion trade remains mixed after a period of consolidation. Price action favors a bounce off support that buys the recent dips in bullion and ETF prices. Traders committing to bullion trades at these levels need to use caution in trade size levels, as resistance tests will create some volatility.

The detail below forms a small part of the in-depth daily analysis provided to subscribers. These outlooks help guide traders with analysis on intra-day price movement, trend, and momentum. Clients will note how regularly the Swing Point and Support or Resistance areas below are used each day.

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Content taken from TheLFB Trade Plans