Gold and silver continue to struggle

3 May

Gold continues to keep traders on their toes as it fails to provide clear signals over future direction. It put in a solid rally from mid-February to mid-April, but has struggled to find a footing since then. In fact, what looked like an entirely reasonable period of consolidation has turned into something more sinister, at least as far as the bulls are concerned. The consolidation was punctuated by two significant negative sessions which saw increased downside momentum. The market is still trying to find its feet after Tuesday’s sharp sell-off, and has been unable to push back above $2,300.

It’s been a similar story for silver. Yesterday silver fell back to its lowest level in a month. But it bounced off $26.00 – the upper end of a band of support which stretches down to around $25.70. Could it break below $26 and retest that lower level? Certainly, and a break below it could undo a lot of the positive work done so far this year. The bulls got a boost following today’s worse-than-expected Non-Farm Payroll release. Silver and gold soared as the dollar tumbled as rate cut expectations were pulled forward a few months. But both precious metals quickly gave up early gains, suggesting that there’s still some work to be done to the downside.