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Momentum Needs To Break In Bullion Trade

Headlines:
News wires remain quiet in regard to gold (1545) and silver (36.50) bullion-related issues. The recent moves to manipulate margin requirements and impact speculative interest in bullion markets seem to have had little overall effect, as the dips in gold and silver trade continue to be bought. However, the bullish momentum is unable to carve out new highs, although it is managing to easily hold tests of support.

Outlook:
The potential for trade signals to form on Tuesday  is weak, as volatile 1-hour moves continue to hit the bullion markets. Moves higher through resistance are struggling to hold for more than one trading session at a time. Traders should be ready for a move in bullion values, but with equity momentum looking like it will transpose itself into USD near-term buying, moves higher in gold and silver trade will need to hit soon.

Trade desk updates recently highlighted the potential for choppy and overlapping price action in bullion markets to continue. GLD and SLV, the exchange traded funds (ETF’s) that track bullion momentum are struggling to keep up with bullion moves.

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

Alternate 24-Hour Trade:
Investors who do not want to wait for their regional cash market to open, or do not have 24-hour access to the market they have open positions in, are able to access the 24-hour currency market. There is potential to analyze and trade currencies in a high-volume market that is supported by the global inter-bank system.

Investors can trade currencies in-line with a rising global market, or trade ahead of a falling cash market open. Being able to use currencies offers the opportunity to be in a trade before the regional market opens.

Traders could trade the currency pair AUD/USD in-line with the potential seen in bullion trade. Selling the US dollar and buying  the Australian dollar on days of equity and bullion strength is a simple process of placing a buy order on AUD/USD. The position can be managed in a similar way that equity-based trades would be bought and sold.

If global market trade favors the buying of gold and silver above 1555 and 37.50, and equity indices reverse recent selling,  a potential trade signal will be issued on AUD/USD. Buying  AUD/USD from 1.0720 draws in 1.0745 and 1.0790.

Full detail of any trade signals that form today will be emailed directly to clients.

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 $24 on gold and $2.50 on silver, which are 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 (150.50) in April, and at 32.50 on SLV (35.70) in March. These swing point areas will be closely monitored and market alerts sent to subscribers if they break. It does seem as though a gap lower in SLV will be seen at the Wall Street open, which will be supported by silver bullion now holding support in the European session.

Main GLD support: 144.00. Main GLD resistance: 151.50.
Main SLV support: 33.50. Main SLV resistance: 38.50.

Technical Correlations:
20-day Simple Moving Average (NYSE:SMA) on gold is at 1510. The 100-day SMA on silver is at 35.40. Gold bullion has a 12-month 90% correlation to the euro (Eur/Usd) currency pair.

Recent Signals:
Bullion signals have been few and far between recently. A long-term buy signal will form if gold closes the week above 1550, 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 to far in either direction; fair value looks to have been found above 35.00.

Sentiment and outlook towards bullion trade remains mixed after a period of consolidation. Price action favors buying any bounces off main support in bullion and ETF trade. 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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§  Foreign Exchange (Dollar Index, EUR, GBP, AUD, CHF, CAD, JPY)

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