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Gold and Silver Technical Outlook: XAU/USD Eyes Breakout as XAG/USD Struggles

Gold and Silver Technical Outlook: XAU/USD Eyes Breakout as XAG/USD Struggles

Daniel Dubrovsky, Strategist

Gold, XAU/USD, Silver, XAG/USD - Technical Forecast for the Week Ahead:

  • Gold prices aimed higher last week, but gains trimmed on Friday
  • If you are watching XAU/USD, keep a close eye on the trendline
  • XAG/USD is looking relatively neutral until a key breakout is seen

Gold Technical Forecast – Slightly Bullish

Gold prices aimed higher this past week, but trimmed losses on Friday as a very strong US jobs report brought Federal Reserve tightening back into the spotlight. From a purely technical standpoint, the yellow metal managed to hold a close above a key falling trendline from March. That said, upside follow-through has been lacking. Further gains would increasingly shift the outlook bullish.

A turn back under the trendline would likely be a near-term bearish sign, placing the focus on the broader downtrend since earlier this year. In that case, clearing immediate support at 1753 would open the door to revisiting the July low at 1681. Resuming the broader downtrend entails pushing below this point, exposing the 2021 low at 1676 and beyond.

On the other hand, extending the near-term uptrend places the focus on immediate resistance at 1803, which is the 61.8% Fibonacci retracement. Beyond that, the 100-day Simple Moving Average (SMA) would kick into focus. That could maintain the broader downside focus. Otherwise, subsequently clearing the line would open the door to revisiting the June high at 1879.

XAU/USD Daily Chart

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Chart Created Using TradingView

Silver Technical Forecast - Neutral

Unlike gold, silver prices aimed cautiously lower this past week. Moreover, a closer look reveals that the precious metal was unable to push above the 20.32 – 20.62 inflection zone. As such, the technical picture seems neutral for the week ahead. Broadly speaking, XAG/USD remains in a downtrend since prices topped back in February.

The 50-day SMA also held as resistance this past week, maintaining the downtrend. A break above this line, as well as the inflection zone, would increasingly shift the outlook bullish. Such an outcome places the focus on the 23.6% Fibonacci extension at 20.98. Beyond the latter, the 100-day SMA could kick in as resistance.

In the event of a turn lower, the midpoint of the extension seems to be immediate support at 19.27. Beyond the latter, lows from July will kick in, making for a key zone between 18.14 – 18.41. The outlook would likely remain neutral until a breakout is achieved under this range. That would expose the 78.6% extension at 17.41.

XAG/USD Daily Chart

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Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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