Can Gold Break Out To Upside?
Last week gold and silver heldthe bottoms, and both had big rallies. Gold rallied from $1,306, gaining almost$40, and silver rallied from $16.10, gaining 55 cents. The real question: canthese rallies hold and go higher or are they just testing the upper end of theranges they have been in for the last couple of months.
The answer is complicated. Theycertainly can break out to the upside, but based on commercial positioning, silverhas a better chance to sustain the rally while gold should stay within therange if not trade lower. At the current levels, gold is overbought and willstruggle to go much higher, while silver has more room to the upside.
The gold/silver relationship isstill considerably out of whack with gold 80 times over silver. We would belong silver, short gold in the current set-up and expect gold to stay in thisrange while working its way back to the lower end of the range. The dollarholds the key for now, but we expect the dollar to rally big.
Contributing tokitco.com
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