The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheLFB-Forex) -- There are very few news wire headlines to impact gold (1520) and silver (34.60) bullion trade. The precious metal markets continue to trade in tight ranges, with the majority of any 24-hour price movement being contained in one or two 30-minute periods of trade. Today is not the day to be looking for gold and silver bullion trades.
Outlook:Gold and silver trade is oversold in the near-term, with a neutral mid-term momentum read. The four-hour trends are flattening out, which sets up a sell-the-test-of-resistance play from the next upside move toward 1550 on gold and 37.50 on silver. The buy-the-dip play at support around 1505 and 34.00 is now going to be closely monitored. The last 12 months of gold and silver trade have shown a strong tendency to find buyers at support. The potential for trade signals to form today is weak, as volatile periods of trade continue to hit the bullion markets. Moves higher through resistance are struggling to hold for more than one trading session at a time. With equity momentum looking like it will transpose itself into USD mid-term buying, moves higher in gold and silver trade will continue to be choppy and overlapping. Any existing gold or 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. Potential short signals are against the overall trend and have not yet confirmed they can easily follow through.
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: 34.00. 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 ( GLD) (147.80) in April, and at 32.50 on SLV ( SLV) (33.80) 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.
Technical Correlations:20-day Simple Moving Average (SMA) on gold is at 1530. The 100-day SMA on silver is at 36.40. 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 34.00. Sentiment and outlook toward bullion trade remains mixed after a period of consolidation. Price action favors standing aside in the near term and monitoring the level of participation as support is tested. 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.
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. Buying the U.S. dollar and selling the Australian dollar on days of equity and bullion weakness is a simple process of placing a sell 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 selling of gold and silver below 1515 and 35.00, and equity indices continue recent selling, a potential trade signal will be issued on AUD/USD. Selling AUD/USD from 1.0490 draws in 1.0450 and 1.0390.
- Foreign Exchange (Dollar Index, EUR, GBP, AUD, CHF, CAD, JPY)
- Equity indices and ETFs (SPY, DIA, GLD, SLV, USO)
- Commodities (Gold, Oil, and Silver)