Gold, Silver Take A Nap
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
After suffering some heavy selling the last few weeks and making five-month lows, gold and silver seem to have fallen asleep the last few days. Although both have rallied off the bottoms, their volume, volatility and daily trading ranges have narrowed to almost nothing -- like the markets are not open.
The rally in the metals looks more like a dead-cat bounce than new money flowing with new buyers. Both gold and silver are above their resistance levels; however, markets that move on low volume, tight price ranges and no volatility are usually preparing for the next move, which in gold looks like a test of the $1,230-$1,240 level. Silver appears a little stronger but could still test the recent lows.
Our long-term view remains bullish, but the short term is tenuous at best and some selling pressure is expected to squeeze the bulls before the rally resumes. Markets never announce themselves, but the metals look to be crying out for a minor sell-off, which should come on volume.