If you are going to be a buyer of precious metals, silver is probably going to be much more attractive than gold based upon recent price action. 

Silver markets fell a bit on Monday to reach down towards the $23 level but turned around to show signs of strength in order to form a bit of a hammer. The hammer sits just below the 50-day EMA, so it is obvious that there will be a lot of interest in this market right around this area. The market breaking above the highs of last week could open up the possibility of a move towards the $24 level, which is a large, round, psychologically significant figure and an area where we have seen a lot of selling pressure.

That being said, if we can break above the $24 level, then it opens up the possibility of a move towards the 200-day EMA. After that, the market could go looking towards the $25 level, which is an area that will attract a lot of headline attention due to its psychology. The $25 level being broken to the upside would almost certainly bring in a fresh amount of buying pressure, as it would be a major turnaround. At this point, there is also an argument made for a downtrend line as well. At this point, I think the market is trying to build up enough pressure to turn things around.

If we do turn around a break down below the $23 level, then it is likely that we go looking towards the $22.50 level, maybe even the $22 level after that. The $22 level is an area that has been important multiple times, and it is worth noting that we have bounced from there and broken above what could be thought of as a potential “inverted head and shoulders.” That being said, though, we have a lot of work to do. It is possible that we will continue to see short-term pullbacks that cause bits and pieces of volatility. Pay close attention to the US Dollar Index because it is negatively correlated to this market, at least over the longer term. In fact, if you are going to be a buyer of precious metals, silver is probably going to be much more attractive than gold based upon recent price action. At this point, silver also has the benefit of having a whole lot of industrial demand as well.

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