For the past two weeks, gold has chosen the healthy route. As evidenced by the graph, it has corrected about $50, or 4%, from its peak of $1308. Volume during the correction has been declining, RSI has found support at the mid-line, and price has found support multiple times at its 200 dma - all of which are textbook consolidation characteristics. In addition, price has managed to stay within the bounds of those two horizontal green lines which is where much of the consolidation from the past year took place. If gold loses the lower bound, approximately $1240, then the nascent rally may be in jeopardy. For now, however, I like what I'm seeing. Given the congestion in the $1240-$1350 range, don't be surprised if price continues to bounce around this area for a while longer. We'll know if the rally really has legs if price can break above $1350. But for now, we wait and see.
Moving to silver, I'm seeing the same healthy consolidation action as gold.
You will notice that while gold is trading above both its 50 and 200 dmas, silver is still goofing around somewhere in the middle. This tells me that if PMs start to rally again, then silver needs to catch up disproportionately to gold. In other words, expect silver to outperform gold in the near term if the metals break out this pullback. Lastly, watch that $18.47 level in silver as it represents its 200 dma as well as resistance from the lows of last summer (blue horizontal line).
While consolidation can drive bulls crazy in the short term, it's by far the best thing that can happen for a sustained longer-term rally. Hang in there.