What’s inside:

  • Gold continues to drop while silver prices hold
  • Daily resistance in low 17s keeps a lid on the upside for now, 4-hour chart in focus
  • FOMC on Wednesday, expect heightened volatility

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Gold continues to fall to its worst levels since February, while silver prices stubbornly fail to follow its yellow counterpart. In fact, it’s not even close to breaking below the November low, let alone to its worst levels since earlier in the year.

While this glaring divergence exists, and from a relative strength standpoint this bodes well for silver, dollar strength and key resistance in the low 17s (~17.30/11) continues to dampen expectations of higher prices at this time. As we reiterated the other day, we don’t buy resistance in this corner (don’t short support, either). That’ll never change.

Silver: Daily

Gold Trades to New Lows, Silver Stays Stubbornly Strong

Created with Tradingview

The intra-day time-frame could help provide us with a clearer picture. There is a channel (possible bear-flag) developing on the 4-hr chart, with good inflection points alongside the bottom of the channel. This is helping keep silver supported, while daily resistance in the low 17s and the upper parallel in the same vicinity are viewed as an obstacle for higher prices.

If we get a clean break of the lower parallel our focus will shift to the November low at 16.18 and the support zone in the 16/15.80 vicinity. A daily close above longer-term resistance and the upper parallel will be required to turn the picture more constructive. However, given the propensity since July for silver to find highs quickly after recoveries we will need to be cautious on bullish bets, despite its relative strength, until we see sustained bullish price action.

4-hour

Gold Trades to New Lows, Silver Stays Stubbornly Strong

Created with Tradingview

Heads up: FOMC rate decision on Wednesday at 19:00 GMT. A 25 bps increase to 0.75% from 0.50% is expected. The policy statement and Fed’s economic projections and rate path expectations will be a primary focus for the market. Expect heightened volatility following.

Trading Guides and Forecasts

---Written by Paul Robinson, Market Analyst

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