Though the May rally in the precious metals was constructive, we continued to see a lack of underlying internal trend support by the XAU/Yahoo advance/decline line, and with the price of silver failing to match the amplitude in the run up in gold, the best interpretation for now is that gold has morphed into a trading range between $1200 and $1300 an ounce. This would actually be good news for the gold bulls for it would suggest that once this consolidation is complete, this pattern base will be used as a platform for gold to rally into the 3rd quarter. Until then, however, trading in the metals will tend to be choppy, if not volatile, with a tradable bottom for investors still scheduled for sometime around early August.
For those who may be interested, the current Precious Metals McClellan Summation Index reading is a +146 after crossing above the zero line on May 22nd for the fist time since March. Technically speaking, we would need to see this indicator move back above the +250 level to change the current intermediate term outlook from bearish to neutral, with a move back above the +500 level to move it from neutral to bullish. Any failure to move back above +250 would likely result in a challenge of the trading range floor at $1200.