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Gold and silver - uninspiring rallies

Commentaries & Views

Gold, Silver and Platinum traders are experiencing the big chop, which means they are churning between two levels trying to breakout. Gold is stuck between $1,760 and $1,800 based on August futures. Silver between $25.5 and $26.5 September futures. And October Platinum $1,050-$1,150.

This morning all three are higher, can the rally hold? No one knows that answer with 100% certainty, but we would say the answer is no based on the pattern. From a trading position, the correct side is to sell the rally; however, when markets are range bound, it is best to wait for the breakout in either direction.

We are trend traders and are always in the markets long or short. Presently we are short Gold and Silver. Expectations are a break to the downside. When analyzing the pattern, we know the trend is lower and that this congestion period suggests a break to the downside.

With the prevailing trend lower, this price action is a rest stop before a continuation of the downtrend. Remember, there are no guarantees, but we know the current trend and will remain short until this pattern changes.

Patience, discipline, and money management always win the day.

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