Gold And Silver Volume Spread Analysis
Leonardo Barata | Jun 24, 2015 01:45AM ET
Gold (XAU/USD) and Silver (XAG/USD) are naturally two very correlated commodities, and the recent action is no exception.
Gold is near a support and a previous broken trendline. There was recent strength (blue signal) with moderate volumes in an area of previous strength, which could be the first signal the support is holding, but so far, the market doesn’t show signs of stabilizing – it keeps making new lows, and the background is still weak.
Silver is too near a support, and in the mid of a down trending channel. Given the price range silver showed today, and the fact that it broke a previous support at 15.8, it was expected that the recent strength has higher volumes than in gold, since more traders and stop-losses were ‘shook-out.’ Like gold, it’s making lower lows, and the background is still weak mostly due to the downtrend. I would like to see a rally to finally break the downtrend and confirm that the recent strength was, in fact, accumulation; if the downtrend is to continue, it’s probably going to test the demand at 1162 in gold, which occurred in early June. In case the market rallies and gives an opportunity to enter, I’d be more inclined to invest in silver rather than in gold, or at least to have a larger position in silver, as XAU/XAG (gold/silver ratio, tradable in some brokers) is showing major selling, which is preventing it from breaking a key resistance.
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