Can The Precious Metal Bottoms Hold?

New York (May 24)  Gold’s struggles appear to be over for now. After bottoming on May 21, gold quietly rallied and has built a solid base, clearing the way for higher prices. The rally came from oversold conditions; however, it was not a dead-cat bounce or short-covering rally; it was simply a great technical spot to enter.

This rally is making higher highs and higher lows, which should bring gold to the first resistance of $1,310, which was the level it failed from. We expect a slow grinding rally on volume. The tape action is bullish, volume is building, and the buyers appear to be new money -- all bullish signs.

Although there is still the chance that gold could test the $1,260 level, we feel the bottoms are in and gold should test the $1,365 level. The long-term pattern looks great and the rally is on.

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