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Can Silver and Gold Break Out and Go for a Spring Rally?

Silver and gold are making nice moves on Monday as equity markets continue to search for a catalyst. Let's look at the charts for a clue as to what may come.

We’re at an interesting spot as we begin May. Bonds have been under pressure, cryptocurrencies have been strong and stocks continue to hang near all-time highs.

Further, we’re in the midst of the first-quarter earnings season and the Federal Reserve remains accommodative, while investors try to balance reflation as the economy reopens.

To no surprise, that also leaves the precious metals in an interesting position.

There is a certain level of industrial demand for this group. But silver and in particular, gold, should be having better price action as investors worry about inflation

On the first day of trading in May, we’re seeing some of that bullish momentum take hold. Let’s look at the charts.

Trading Silver

Weekly chart of the SLV ETF.

Weekly chart of the SLV ETF.

There are a few ways to trade silver, but for simplicity, I’m going to look at the iShares Silver Trust ETF  (SLV) - Get iShares Silver Trust Report instead of silver futures.

The stock is above all of its major weekly moving averages, as investors can see above. However, it’s also above all of its major daily and monthly moving averages as well.

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With Monday’s rally, the SLV is also giving us a monthly-up rotation over the April high.

From here, let’s see if it can test the 61.8% retracement at $25.22, then push up toward $26. Above $26 could put $28-plus in play, with a move to $30 or higher possible should the stock take out its current 52-week high.

On the downside, a move back below the April high will have bulls shifting into a more cautious state. However, as long as it holds above the 10-week and 21-week moving averages, the SLV still looks OK.

Trading Gold

Weekly chart of the GLD ETF.

Weekly chart of the GLD ETF.

The SPDR Gold Trust ETF  (GLD) - Get SPDR Gold Shares Report doesn’t have as clean of a chart as silver at the moment.

While it’s above the 10-week and 10-month moving averages, gold remains below a number of key moving averages. Specifically, it continues to struggle with the 21-week moving average.

Further, while it’s close to a monthly-up rotation over $168.39, it’s not rotating over this mark quite yet.

Should the stock give bulls a monthly-up rotation and reclaim its 21-week moving average, look for a potentially quick rally up to the 50-week moving average near $172. While this moving average had been support until this year, let’s see if it has turned to resistance or if it can be reclaimed.

Back above the 50-week puts $175 back in play. Above this key level and $183 is possible.