Silver Prices Into June

It's June 2, the first trading day of the new month, and already prices are moving so fast that they're front running all that I had planned to write about this week. But that's OK. Price never moves up in a straight line, so there should still be plenty of time to plan for what should be an exciting summer rally.
As we've been discussing for weeks, this notice of gold being "overbought and overcrowded" was a fool's errand and a theory put forth by those who don't understand the fundamental factors that have been driving the gold price higher for nearly two years. To that end, a summer rally is going to catch almost all traders by surprise, and we tried to warn of this last week.

And here we go. What you see below is a very healthy-looking chart of a bull market in progress:

Gold Price - Daily Candlestick Chart

Silver Price Analysis And Trading Signals

But what about silver? Price has been trapped in a $2 trading range for eight weeks. Will it finally break out and then follow the gold price higher through the summer? As of last week, you had to wonder. As of the first trading day of June? Maybe some questions are being answered.

Silver Price - Daily Candlestick Chart

Look closely at that chart above. Do you see the blue arrows that direct your attention to the red and green lines? What you see there are bullish crossings of the 20-day moving average (in red) up and through the 50-day moving average (in green). This cross is a bullish short-term trading signal, and many of the HFT algos that dominate the trading of COMEX silver futures are programmed to notice such things.
The previous time this cross was observed was on Thursday, January 30. Notice that price gapped higher and then proceeded to rally another two dollars over the next three weeks.
This most recent cross occurred on Monday morning, June 2, and the HFT algos immediately took notice. Have a look at the intraday chart where COMEX trading began at 7:25 a.m.:

Silver Futures Chart

Silver Rally Forecast For June

So will the silver price extend another $1-2 during the month of June? At this point, we should assume that it's likely to do so, with a rally that takes it toward the early April highs, at a minimum. How far might it rally from there? That will depend a bit upon the rally in gold.
A larger factor will be the summer action in the U.S. Dollar Index. As I type, it looks almost certain to test the April lows near 98. However, IF THAT LEVEL GIVES WAY, AND IF THE INDEX BEGINS TO FALL TOWARD 96 OR LOWER, then this next leg higher in gold and silver prices will not stop at $3500 and $35. Of that you can be certain.

U.S. Dollar Index - Daily Candlestick Chart

Watch The U.S. Dollar Index Closely

With that, let's see where the week takes us. Summer has begun and, with it, a summer rally in the precious metals too. Will we soon see new all-time highs in the gold price and another surge to multi-year highs in the silver price? Keep an eye on that Dollar Index and you'll have your answer.

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