Gold, XAU/USD, Silver, XAG/USD - Technical Outlook:
- Gold and silver have found a short-term floor.
- XAU/USD and XAG/USD need to tackle stiff resistance for the outlook to improve meaningfully.
- What are the key levels to watch?
There is no reason to be overly excited about the recent rally in gold and silver. The recent rebound is part of the broader range formed in recent weeks in precious metals. Both gold and silver have rebounded handsomely this month –a possibility highlighted in the previous update. But further gains from here could be tough. This doesn’t necessarily mean that precious metals are looking bearish. Rather, it speaks to the likely continuation of their established ranges.
GOLD SHORT-TERM TECHNICAL OUTLOOK - NEUTRAL
Gold has broken above key resistance at the October high of 1729 (the price objective outlined in the previous update), confirming that downward pressure has faded in the short term. However, the yellow metal now faces a stiff converged ceiling in the 1800-1820 area. This includes the 200-day moving average and at least three trendlines, including one from the end of 2021, another from July, and the third from August.
XAU/USD Daily Chart
Chart Created Using TradingView
XAU/USD has also cleared the 89-day moving average for the first time since May, warranting at least a “neutral” outlook in the short term, if not an outright “bullish” one. This month’s rebound came about as gold struggled to break below the horizontal trendline from 2021 at about 1675-1680, roughly coinciding with the 200-week moving average.
Going forward, a retreat from around 1800-1820 is possible. However, short-term upward pressure is unlikely to ease while gold holds above the October high of 1729. Subsequent resistance is at the June high of 1877.
SILVER SHORT-TERM TECHNICAL OUTLOOK - NEUTRAL
While gold is nearing a vital barrier, silver is testing a similar hurdle. XAG/USD is struggling to break past converged resistance on the 200-day moving average, not too far from the top edge of a slightly upward-sloping channel from August, but slightly below the June high of 22.50. Silver needs to clear this resistance for the short-term outlook to turn bullish.
XAG/USD Weekly Chart
Chart Created Using TradingView
For now, though, a bearish reversal on the silver daily chart on Tuesday could be an early sign that this month’s rally is showing signs of fatigue. Any break below the October high of 21.25 could confirm that the short-term upward pressure had faded, pushing XAG/USD back within its three-month range.
XAG/USD Daily Chart
Chart Created Using TradingView
--- Written by Manish Jaradi, Strategist for DailyFX.com
