by Stefan Gleason, GoldSeek:
Friday’s disappointing jobs report sets the stage for markets to continue weighing the broader implications this week. Gold and silver prices rose modestly Friday on the increasing likelihood that the Federal Reserve won’t raise rates in June. However, the precious metals still registered losses for the week and have corrected further this morning.
Gold prices traded slightly above the $1,300/oz level last Monday and Tuesday intraday but couldn’t close above it. It appears that $1,300 is, for now, a psychological barrier to gold’s continued advance. Short sellers in the futures markets are keen on defending it. Once cleared, gold could rally strongly on a fresh wave of short covering.
The silver market also neared – but didn’t quite reach – a formidable resistance level last week. Silver broke down below $18.50/oz in mid 2014 and has traded below it ever since. The last time silver tested the $18.50 level, in early 2015, it immediately turned down. Back then it also had to contend with a down trending overhead 50-week moving average.
Today the silver market is on stronger technical footing, having broken out far above the 50-week average, which itself is starting to turn up. The big institutional short sellers will try to defend $18.50 for as long as they can. But if their backs are broken – and that’s a big IF in the short term – silver prices could zoom up into the $20s quite rapidly.
For now, silver and gold bulls will have to contend with a futures market that has the “big boys” positioned heavily against them – and those big boys are having another good week so far. On Friday’s Money Metals podcast, precious metals market analyst Craig Hemke talked about the recent explosion in open interest in gold contracts on the COMEX.
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