Gold and Silver – 27 Dec

Gold is doing a whole lot of nothing and is exhibiting end of year trading patterns, low volume participation and profit taking. Short term we have a sideways consolidation triangle forming with support around 1372. Further chart support lies at the 1350 level, followed by another layer at 1330. This whole area between 1330 and 1430 has effectively built a foundation for further advances in the new year. The Bollinger bands are contracting and indicate ever lessoning volatility. This inevitably leads to a breakout in volatility and expansion of the bands as price either breaks higher or lower. Since the fundamentals of the dollar and our economy have never been worse, you know which way I think the break will be.

The longer term chart shows that the 45 day moving average (blue) has provided support for the entire move from 1155 and is currently being tested. The fibonacci 38.2% retrace line is coming in at 1325 and is providing major support. RSI and MACD are showing clearly defined downtrends in momentum and indicate a consolidating market. I expect we will have to see traders return from holiday to see any meaningful changes.

Silver is experiencing the same end of the year trading as gold, but the chart paints a stronger picture. This has been the case for the entire rally and is indicative of the pressure the coordinated silver short is experiencing. The short term trend is sideways with consolidation trading between 28 and 30.67. The long term trendline (green) is intact and is currently being tested. Chart support is at 28, along with the Bollinger band. Unlike gold, silver has received support and successfully tested the 18 day moving average for the entire move. Price is presently there again a nd testing this moving average. The Bollinger bands are getting extremely tight which indicates a break is coming soon that will rapidly expand volatility and the bands. fibonacci 38.2% retrace is coming in all the way down at 25.74 and is major support. As with gold, RSI is showing reduced momentum and MACD to a lesser degree. Again, this is indicative of end of the year trading with most of the market enjoying holiday rather than working.

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