Gold and Silver – 27 May

Gold made another high today and closed very near it. The Bollinger band provided the resistance after 1526 gave way. Another close above 1526 turns that level into support. the trend is alive and well and the Bollinger bands have contracted to the point where we can expect a break soon. I think gold wants to make a play for 1550, a big round number, then off to 1575. It appears that stochastic is going to embed on Tuesday and that would be constructive to the notion of accelerating momentum upwards. RSI is a very reasonable 62, plenty of room there for a run to 1575. The 45 day moving average is the average that is acting as ultimate support. I agree with many analysts right now that gold is stronger than silver.

Silver confirmed yesterday’s high as the latest swing high by closing the day without besting 38.81. Price will now have to stay above the previous swing low just above 34 to maintain the current up trend. Initial support is the 18 day moving average currently at 36.02. Further support is a dollar below there near 35 and is being provided by the 100 day moving average. Resistance overhead remains 39.46. The technical studies are all exhibiting less strength than gold. The Bollinger bands are contracting as with gold, a break out for silver is likely imminent. I would keep a tight stop on any speculative silver trades just in case the break is lower. Silver is more susceptible to smoke and spin because it has more commodity character than money character. A pronounced weakening of the economic story may hit silver very hard and at the same time be constructive to gold.

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