Gold and silver are expected to trade sideways this week on the dollar rebound and increased safe-haven demand over concerns related to the economic slowdown in Europe. In addition, offsetting effects of the momentum indicator and exponential moving average, or EMA, indicate the sideways movements for the precious metals. Gold futures for June last week on COMEX gained more than 1.4% and traded in the range of $1249.70 to $1184.40 before closing at $1227.80. Prices are trading above the Bollinger band suggesting prices may fall over the upcoming trading sessions. Two weeks earlier, markets witnessed 981,554 contracts -- highest in the past nine weeks --suggesting the possibility of a small unwinding of long positions. The momentum indicator is trending at 0.68 (0.70 is considered overbought) suggesting that bullish sentiments may not prevail over the coming sessions. However, prices are trading above the 13- day, 22-day, and 45-day EMA implying bullish sentiments for the week. Silver July futures on COMEX traded higher, gaining 5.33%, and moved in the range of $19.82-$18.18 before finally closing at $19.34. Prices are trading well above the 13-day, 22-day and 45-day EMA implying bullish sentiment. The momentum indicator was up from 0.42 to 0.62 suggesting prices may trade with prolonged bullish sentiments for the week. But prices are trading closer to the upper end of the Bollinger band suggesting prices may fall for the coming sessions. Two weeks earlier, the market broke the previous crucial resistance of $19.46 but finally closed lower, implying that $19.46 could still be the resistance level for the week. Economic data this week may turn out to be slightly positive for the dollar on expectations of an increase in U.S. Treasury international capital flows, new home construction, a decline in jobless claims, and acceleration in manufacturing activities. In addition, the dollar index will continue to march higher during this week on economic concerns in Europe. Last week, eurozone debt concerns continued to provide safe-haven support to the yellow metal, which later erased most of its weekly gains on Friday as the dollar index strengthened. The index gained after a host of positive economic data in the form of increasing retail sales, rising industrial production, and improving consumer sentiment index. Bullion prices rose for the fourth straight week. Moreover, rising investment demand as well helped gold prices reach new highs. The SPDR Gold Trust ( GLD) said its gold holdings rose 25.56 tons to 1,214.06 tons for the week ended May 14.
Silver regained the momentum that it lost during the previous week in line with the decline in broader markets. Investors turned net buyers for the white metal. Silver prices zoomed more than 4% to close higher at $19.23 an ounce. The metal rose to as high as $19.85 an ounce during the week. Base metals also provided momentary gains to silver prices, although the base metals' complex ended marginally lower on the London Metal Exchange. Equity markets also stabilized as the benchmark iShares Silver Trust ( SLV) increased its holdings by 103.65 tons to 9,191.37 tons during the week ended May 14. Meanwhile, the gold-crude ratio for the last week increased to 17.15 from 16.12 a week earlier because of the crash in oil prices. The gold-silver ratio dropped to 63.86 from 65.60 a week earlier on account of silver prices rising more than gold. Almost all the gold and silver producers gained last week on the positive momentum in precious metal prices. US Gold ( UXG), Golden Star Resources ( GSS), Harmony Gold Mining ( HMY), and Eldorado Gold ( EGO) led the pack of gold miners with gains of 26%, 16.7%, 10.9%, and 10.7%, respectively. Meanwhile, major gold producers Barrick Gold ( ABX), Goldcorp ( GG), and Newmont Mining ( NEM) were up 6.5%, 6.8%, and 8%, respectively. Among the silver producers, our stock picks Silver Wheaton ( SLW) and Pan American Silver ( PAAS) gained 14.6% and 11.3%, respectively last week. Other silver producers Compañia de Minas Buenaventura ( BVN), Hecla Mining ( HL), Endeavour Silver ( EXK), and Coeur d'Alene Mines ( CDE) were up 12.4%, 11.3%, 11%, and 10.8%, respectively.