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Gold Price Soars to Five-Year High, Silver Smashes Through Resistance

Gold Price Soars to Five-Year High, Silver Smashes Through Resistance

2019-06-20 08:15:00
Nick Cawley, Analyst
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Gold Price/Silver Price, Analysis and Charts.

  • Gold prints a fresh five-year high after dovish Fed policy.
  • Silver breaks above the 200-day moving average.

Gold on a Roll as Investors Eye Alternative Asset

Gold traded as high as $1,395/oz. late Wednesday – its highest level since March 2014 – after US Federal Reserve Chair Jerome Powell paved the way for interest rate cuts in 2019. The market has already ready fully priced-in a 0.25% rate cut at the July meeting with one and potentially two more cuts penciled in before the end of 2019. Gold is expected to perform strongly in the coming months as a weaker US dollar, falling bond yields and lower inflation expectations make the precious metal an attractive asset to hold.

US Dollar Sinks After June Fed Meeting Signals Potential Rate Cuts

Gold baulked at $1,400/oz. yesterday and has sold off back to its current level around $1,383/oz. Initial support is likely to be seen around the old April 2018 high around $1,365/oz. but yesterday’s spike move needs to build more volume and find a base before the next move higher. The $1,400/oz. psychological level needs to be broken and closed above to open the way to the August 2013 high at $1,436/oz.

How to Trade Gold: Top Gold Trading Strategies and Tips

Gold (XAU) Daily Price Chart (March 2018 – June 20, 2019)

Gold Price Soars to Five-Year High, Silver Smashes Through Resistance

IG Client Sentimentshows that retail traders are 56.5% net-long gold, a bearish contrarian indicator. Recent daily and weekly sentiment shifts however give us a stronger bearish contrarian trading bias.

Silver Finally Breaks Resistance

After battling with resistance off the 200-day moving moving average over the last two months, silver followed gold sharply higher late Wednesday and not just broke higher, but more importantly closed above the 200-dma. To the upside a cluster of previous highs and the 38.2% Fibonacci retracement level between $15.55 and $15.64 while to the downside, the 200-dama now turns to support around $15.04 ahead of the 23.6% Fibonacci retracement at $1,492.

Silver Daily Price Chart (May 2018 – June 20, 2019)

Gold Price Soars to Five-Year High, Silver Smashes Through Resistance

The gold/silver ratio has turned marginally lower overnight, post-Fed to around 89.50, and now trades around 90.

(amended from original version)

Trading the Gold-Silver Ratio: Strategies and Tips

--- Written by Nick Cawley, Market Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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