Precious metals – consolidating above support

Gold, and silver, have been on a stomach-churning rollercoaster ride since they broke above significant resistance levels around two weeks ago. For gold, this was the area between $2,000 and $2,010 which seemed to be an insurmountable barrier for the bulls. But finally the buyers built up enough strength to batter through here. Gold went on to make a record closing high of $2,072 on Friday before surging 3.5% in illiquid trade on Sunday night to hit $2,146 before reversing sharply. Since Monday afternoon it has traded sideways, roughly within a range of $2,010 to $2,040 – in other words, it looks as if the upper level of prior resistance is now holding as support. Silver was the first-mover when it came to breaking through resistance. But it too has round-tripped having approached $26 at the beginning of this week, and now retesting $24, once resistance, now a very important level of support. If we see a significant break of $24, that is in size and duration, then hopes of a continued rally in precious metals could be called into doubt.