Gold

The short-term charts for Gold looks good with a technical bounce taking place as the rollover of the June futures into the July contract is completed. That said, it appears as though we are in no mans land with the 50 day moving average providing resistance, bullish technical indicators, and bearish seasonality. One strong sign is the appearance of a cup and handle formation with the handle being traced out.

The longer-term charts are bullish with the potential for a low to be put into effect very shortly if it has not done so already. The next few weeks weeks will be crucial as to determining if and when a low has been put into effect.

Gold is typically weak in the 2nd and 3rd quarters putting in a bottom in the summer to fall period before moving higher. We may be at the pivotal moment where Gold puts in its yearly low before moving higher. At worst, the potential downside is limited and investors should consider an investment allocation between 1150-1175 with 1065 as an absolute floor.

Silver

Silver has broken out of a pattern of lower highs and lower lows in the short-term charts and looks primed for a move higher. The big question will be how the price reacts to a test of the 50 day moving average. If it can hold this will be a major bullish signal and a sign that the price of Silver will be targeting its 2010 high of just over $19.50 per ounce. If not, we are likely to see a continuation of the trading range which has defined the price for the bulk of 2010.

Longer-term the charts conflict with the weekly showing a bullish slant while the monthly holds an overbought signal. While the weekly can trump the monthly chart sign it is likely that they are signaling a continuation of the sideways trading pattern seen for the past year. One positive sign is that the trading ranges on the long-term charts are gradually tightening which may provide a signal that the next major move is coming shortly.

Oil

The short-term charts for WTIC show a volatile yet fairly tight base. Currently, there is a channel and we are sitting at the upper portion. Technicals are overbought which indicates the potential for a pullback into the $77 area. If we were to break higher $87 would be the next major resistance level.

Longer-term charts have WTIC just breaking out of a resistance level in the middle of a longer term basing pattern. Technical indicators have a bullish slant which may indicate a move towards the top level of the base.

Fundamentally, as long as China and India continue their growth the pressure on WTIC prices will be to the upside.

Last week:
Investors should pay close attention to the ascending wedge formation in the US charts. We may see a strong move to the downside this week. This downside move may help form the right shoulder of an inverse head and shoulders pattern. However, there is a larger head and shoulders top forming. Lots of cross currents short-term.

Thanks to StockCharts.

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