Headlines and Open Positions:
News wires are very quiet in regard to gold (1535) and silver (38.00) 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. Moves higher through resistance however are struggling to hold for more than one trading session at a time. The potential for new trade signals to form today is weak, but traders should be ready for a break higher in bullion valuations if equity markets hold support this week.
Trade desk updates recently highlighted the potential for choppy and overlapping price action in bullion markets, and in GLD and SLV, the exchange traded funds (ETF’s) that track bullion momentum. Those moves look to have formed 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, although a break above 38.20 will draw in buying activity. Clients received a gold bullion signal recently to get long with a break of 1531 that has moved higher to test 1535.
Alternate 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 global equity and commodity movement. Selling the US dollar and buying the Australian dollar is a simple process of placing a buy order on AUD/USD, and then closing that same position in a similar way that equity trades would be bought and sold.
If global market trade favors the buying of silver bullion above 38.20 a potential trade signal will be issued on AUD/USD. Buying the AUD and selling the USD via this currency pair from 1.0720 draws in 1.0745 and 1.0790.
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 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: 38.50.
Technical Correlations:
20-day Simple Moving Average (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 1540, 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.
