A Thursday/Friday rally in both gold and silver halted a two and a half week slide as the 1240 level and 16.30 level were rejected in both August gold futures and July silver futures. The reluctance of selling at those levels could be telling, particularly for gold. August gold futures held trend line support and finished the week back above the 100 and 200 day moving averages.
Despite an equity market that won’t turn over, weakness in the dollar was a major reason for gold and silver’s resurgence late this week. In fact if the dollar can sustain lower highs and lows on the charts in the coming days, the prospects for August gold futures to trade over the 50 day moving average at 1261.6 and then over 1270.0 looks promising. A lower dollar would squelch the deflationary under current in the market that has been prevalent since last week’s Fed announcement and priced in rate hike.
In fact there a few Fed governors giving speeches this week with one prominent voting member decrying a long term hawkish stance which most likely aided gold late this week. Technically gold needs to hold trend line support below 1250.0 on the weekly chart and if it can close above the 50 day moving average (1261.6), we should move higher into month and quarter end. A close below 1245.0 most likely means new near term lows on the charts, most likely down to 1234 and quite possibly the May lows near 1220.0.
Look to be a buyer of any breaks early next week but be out on a close below 1245.0. I don’t think the trade will want to be short going home next week in front of the 4th of July observance. Geo-political noise is starting to ramp up in Washington. The Senate is unveiling their version of the health care plan. Failure to get the bill out of committee or final passage could bring uncertainties on the future of meaningful tax repeals and legislation. This may create nervous longs in equities which in turn could favor gold longer term.
For the week August gold lost a whopping 1 tick to close at 1256.4 down ten bucks from the prior weeks settle at 1256.5. July silver lost 1.5 points on the week to close at 1664.5.
My weekly technical swing numbers for next week come in as follows. For August gold, support is down at 1245.4 and with a close under 1234.4 is next. Resistance is up at 1263.7 and then up at 1271.0. For July silver, support is down first at 1638.7 and then 1612.8. Resistance is up at 1683.1 and then up at 1701.8