Gold has found a little buying interest around the May low, while the price action in silver price has been weaker, with offers coming in on every uptick. A theme which is unsurprising given the general relative weakness we’ve seen in silver compared to gold in recent months. Silver is only a bad day away from the December low while gold still needs to drop $100. This disparity makes silver the preferred short between the two major precious metals.
That is our ideal – short a failed bounce into resistance. But we don’t often get our ideal, and silver may be too weak to even mount a recovery to the before mentioned levels. If this is the case, then a day or two of horizontal price movement may be all that is offered for traders before we see a continuation-trade develop. A ‘dead-cat’ bounce (a very small bounce amidst a strong decline) around or just below the May low, and subsequent break lower is our alternative approach. Of course, silver could just continue its one-way course lower towards the December low or worse. On this end, chasing momentum isn’t an ideal way to enter, but for the vigilant momentum-trader this could be the way to go.
Heads up – Tomorrow, the June U.S. jobs report is due out. Expect volatility, and depending on whether or not there is a large deviation from the consensus +173k NFP number, the uptick in price movement could be material.
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