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Gold And Silver Back Into The Range

Headlines and Open Positions:
News wires are very quiet in regard to gold (1517) and silver (36.80) bullion-related issues. The recent moves to manipulate margin requirements and impact speculative interest in bullion markets seems to have had little overall effect, as the dips in gold and silver trade continue to be bought. Moves higher through resistance are struggling to hold for more than one trading session at a time.

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 short-gold or short-silver positions should be monitored while recent price action is absorbed. There have been very few clear-cut signals in the silver bullion market recently. Clients received a gold bullion signal to go long with a break of 1531 that failed to trigger in overnight trade.

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

Main gold support: 1470. Main gold resistance: 1550.
Main silver support: 34.50. Main silver resistance: 39.50.

Daily trading range is $25 on gold and $2.60 on silver, which are way above the historical norm and indicate that speculative interest is still high, and dips will likely continue to be bought. 

ETF Price Action:

Strong buying activity was seen at 144.50 on GLD in April, and at 32.50 on SLV in March.
These swing point areas 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: 33.50. Main SLV resistance: 37.50.

Technical Correlations:
20-day Simple Moving Average (NYSE:SMA) on gold is at 1510. The 100-day SMA on silver is at 35.10. Gold bullion has a 12-month 90% correlation to the euro (Eur/Usd) currency pair.

Outlook:
A long-term buy signal will form if gold closes the week above 1535, which could be sustainable if global equity and risk markets reverse a recent bout of negative sentiment. Silver has not shown any desire to move lower and fair value looks to have been found above 35.00.

Sentiment and outlook towards bullion trade remains bullish 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. Signals will be sent to clients as sustainable movement is seen.

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Clients will note how regularly the Swing Point and Support or Resistance areas are used each day, and will soon come to rely on TheLFB trade plans as a point of reference before committing to any new positions.

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