- Gold trades to 2011 trend-line, viewed as major resistance until overcome; watch for a break below 1260
- Taking our cue from gold for handling silver
- Bearish gold below 2011 t-line, silver under 17.47
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As we said last week, we are turning to how events are unfolding in gold to help shape our expectations for silver prices. On that, gold is up against a very important trend-line dating back to the 2011 high. Its influence has been quite significant on several occasions in the past year, and as we’ve said before it is our ‘line-in-the-sand’ for both sides of the market. Stay below and the long-term downtrend remains intact, break above and the gold may be on its way to turning the corner for a big move higher. With gold currently trading right around this line, we’ll first respect it for what it is until broken – major resistance. In the near-term, keep an eye on gold as it is currently supported by ~1260. A break below may be all it takes to set into motion a sell-off now that the 2011 trend-line has been tagged.
When it comes to silver the technical landscape has been a bit murkier, with nothing substantial to lean on recently. But with gold up against the 2011 trend-line, the bias is skewed towards lower prices at this time. The relatively weak posturing of silver compared to gold suggests that if gold pulls off the 2011 trend-line with momentum silver will take a hit, and potentially a big one. Over the past two months silver has put in a lower low (May low < March low) and now in position to put in a lower high from April.
For now, as long as silver stays below the recent swing-high at 17.47 and gold below the 2011 trend-line we’ll reside in the bear-camp. A break below the lower parallel in silver and 1260 in gold should be enough to intensify selling pressure.
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---Written by Paul Robinson, Market Analyst
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