Gold, silver, and metals ETFs are dipping in trading Monday, fueled in part by some recent chart-based selling and stabilizing stock prices, as striking bond yields ease somewhat. There is considerable debate as to whether the downtrend will continue or if this is a buying opportunity for gold and silver bulls.
Bond yields are falling Monday, which news have metals’ traders and investors lightening their positions. Gold fell $3.80 to trade at $1,737.90 while May Comex silver lost $0.561, more than 2%, to trade at $25.76 per ounce.
Silver looks to be continuing its downtrend according to some analysts.
“May silver futures bears have the overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at $27.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the March low of $24.845. First resistance is seen at $26.00 and then at today’s high of $26.35. Next support is seen at today’s low of $25.45 and then at $25.00,” wrote Kitco analyst Jim Wyckoff.
Gold may be following silver’s lead, although a bottom may be coming, explains Wyckoff.
“Technically, April gold futures bears have the overall near-term technical advantage. However recent price gains suggest a market bottom is in place, as a price downtrend line on the daily bar chart has been negated. Bulls’ next upside price objective is to produce a close above solid resistance at $1,775.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the March low of $1,673.30. First resistance is seen at today’s high of $1,747.00 and then at the March high of $1,754.20. First support is seen at today’s low of $1,726.40 and then at last week’s low of $1,716.60,” the Kitco analyst added.
Meanwhile, Seeking Alpha analyst Florian Grummes sees silver as a hedge for future uncertainty, based on analysis of the gold/silver ratio, and even going so far as to recommend the iShares Silver Trust (SLV).
“A look at the monthly chart of the Gold/Silver-Ratio above shows that historically price violations of the 40 moving average result in a move much more closer towards a median zone. Imbalance, principle-based, returning to balance. This, even with the most moderate early area of a 43.50 level (our studies show a reasonable likelihood of a value of 18), provides a turbo stack-able edge for a Silver purchase. These additional boosters for a higher likelihood of success of your investment make all the difference,” wrote Grummes.
For investors looking to allocate precious metals into their portfolios using ETFs, Sprott has quite a collection of metals funds to choose from. The Sprott Physical Silver Trust (PSLV) offers access to silver while the Sprott Gold Miners ETF (SGDM) and Sprott Junior Gold Miners ETF (SGDJ) boast access to gold miners.
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