Gold & Silver: Accumulators Buy Now

Gold and silver currently have a bit of a fundamentally and technically oriented “hangover”.

From a technical perspective, gold is recoiling from the weekly chart downtrend line and a daily chart overbought condition. 

The Stochastics oscillator I use for the daily gold chart is the 14,7,7 series. It’s now at about 32, and decent rallies tend to begin after it’s declined to about 10.

From a fundamental perspective, gold is in between rate hikes in America.  It tends to rally after a rate hike, and be soft before the hike. That’s the case right now.

The next FOMC meeting is on Wednesday. I expect Janet Yellen will hint that the June rate hike is not a sure thing, and that will do nothing to alleviate the current price softness.

Also, the next jobs report is due to be released on Friday. Gold has a rough general tendency to decline ahead of the jobs report, and then rally after it is released.

So far, gold is reacting with “textbook” price softness ahead of this jobs report. All members of the world gold community should cheer that it rallies with textbook strength once this report is released!

The end of Indian dealer stocking for the Akha Teej festival is probably the biggest reason for the current “wet noodle” gold price action. 

Dealer stocking in preparation for the festival was incredibly strong and created the gold price rally to the $1300 area. 

Unfortunately, while Indian citizens bought decent amounts of gold for the festival, it doesn’t appear to be as much as the dealers bought. That’s created a lull in the market.

That’s a shorter term look at the gold chart. 

Note the broadening pattern that has been in play since gold recoiled from the $1300 area high. These types of patterns tend to be resolved in quite a violent fashion.