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.

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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 indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts.  Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2011, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Wednesday, 25 May 2011 | Digg This Article