As the precious metals trade in the month of May it should not be overly surprising that volatility has dropped, and the market has been trading in a sideways range. Remember I called for the beginning of the summer doldrums several weeks back - late April through late July generally sees the precious metals trade sideways to lower correcting off the 1st quarter rally.
Expect prices between $870 and $860 to be supportive for the yellow metal, and prices between $900-$910 to produce resistance. The USD has slowly moved off its recent spike contract low of 7105 basis June futures , but relatively the USD has not gotten very far. The USD has also consolidated spending most recent trading between 7250 and 7350. With the USD consolidating higher is would not be surprising to see the inversely related gold to be consolidating lower.
General attitude should be sideways trading - we have been selling June strangles for the last several weeks looking for the market to move sideways into the end of May (June option expiration). Looking forward I believe you will see better long term buying opportunities in June and July than the prices we are currently at.
Dave Meger
Alaron Research Team
800.935.6484
dmeger@alaron.com
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