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Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

Silver Outlook – Taking Cues from Gold Trading at Key Price Zone

Paul Robinson,

What’s inside:

  • Gold, silver bouncing into resistance
  • Taking cues from gold with its cleaner picture
  • Neutral to bearish as long as resistance stays in place

Find out what’s driving precious metals in our market forecasts.

Precious metals have been in bounce-mode the past couple of weeks, but can the bounce turn into something more? Silver hasn’t had the cleanest levels to work with, which is why we’ve deferred to gold instead to help shape our outlook. Gold is up against a solid area of resistance in the low-1260s along with the underside of the trend-line extending higher from December; it’s backed off a couple of times in the past week but continues to hang tough. If gold doesn’t soon turn lower then probability increases it will make a serious run at overcoming the recent swing high at 1265 towards a much more important area of resistance. On a break above there isn’t much room left for gold to run before the long-term 2011 bull/bear line-in-the-sand becomes another obstacle, a much larger obstacle to overcome. Macro-speaking – stay below, then big-picture bias remains neutral to bearish; make a break above and things could quickly become interesting from the long-side.

Gold: Weekly


So, to answer the earlier-proposed question – there is still a lot of work to be done before gold (and silver) can go from bouncing into a full-blown rally.

Looking at price action in silver over the near-term, while gold struggles to overcome the low-1260s silver is trading around a trend-line running under swing-lows in January and March. A bearish reversal bar was put in on Tuesday, but has yet to lead to any follow-through. A break above the Tuesday high at 17.31 will negate the reversal bar.

Silver: Daily

For now, the picture is a bit murky in silver, but looking to gold as long as the yellow metal stays below 1265 then the bias for precious metals as a whole is neutral to bearish over the near-term. A break above resistance in gold could bring in some short-term momentum but efforts to push higher may be quickly thwarted by the 2011 bull/bear trend-line.

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

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