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Bullion
futures could still have one last relapse before the correction from early
May’s record peak has run its course, but odds of this occurring are diminishing
by the day. We told subscribers Monday night that Comex
June Gold would be out of the danger zone if it closed above 1528.70
yesterday. In the actual event, the futures got as high as 1529.00 –
three ticks above our minimum target – but they were unable to sustain
altitude and dropped back $9 before getting second wind. Bulls seized the
advantage by recouping about half of the loss as the session drew to a close.
Looking
just ahead, if the June contract rallies on Wednesday and is sitting above 1528.70
at the final bell, we’d rate it an odds-on bet to continue rising over
the near-term to at least 1594.90. That would represent a rally of a little
more than 4%, and we would expect that it would take about 6-8 days to play
out. As of Tuesday night, chances of this occurring looked good, since the
June futures were in a pattern projecting to 1536.30 over the very near-term.
That’s a “Hidden Pivot resistance,’ and although
we’ll be looking for a pullback precisely from that number, a moderate
retrenchment could leave the futures holding above the 1528.70 threshold
noted above. We have inferred that Gold would be pulling Silver along with
it, since the latter needs to rally from a current 36.560 to 44.000 to trip
the same go-ahead signal as Gold.
 
Both Gold and Silver have been moving very precisely
to our targets in recent weeks. The May 2 peak in June Gold at 1577 fell just
$4 shy of a longstanding target we’d been using at 1581, and subsequent
retracements in both Silver and Gold futures came down to lows that almost
perfectly matched our forecast. We’d called for a potentially important
low at 1470.00 in June Gold and at 32.300 in Silver. In fact, Gold hit
1471.10 and has been moving higher since, and Silver has been doing likewise
since bouncing off 32.300 exactly. (Learn how to calculate these targets and
to use them yourself by taking a free trial
subscription to Rick’s Picks. This will allow you to
access a 24/7 chat room that draws veteran traders from around the world.)
July Crude
on a Ledge
Since
we never want to chisel our expectations in stone, we are keeping a close eye
on several other trading vehicles, including Crude Oil, the Dollar Index and
the 10-Year T-Note, whose behavior will have implications for bullion. In
particular, July Crude looks primed to drop 15% in the weeks ahead, to around
$85 a barrel. If so, precious metal quotes will fall too. A strengthening
dollar would also make strong rallies in gold and silver unlikely. Although
the greenback has lifted off sharply off early May’s lows, the move has
been balky, pausing for breath at each minor resistance. This is not the way
powerful rallies typically begin, and that’s why we think this one will
be short-lived, Even so, we’re prepared to run with the bulls, at least
for a while, if the rally appears to pick up steam. Most immediately, that
would imply a pop today in the Dollar Index to 76.44 – 48 cents above
their current 75.96.
Rick Ackerman
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Information and
commentary contained herein comes from sources believed to be reliable, but
this cannot be guaranteed. Past performance should not be construed as an
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