Silver Prices – Outlook Hinges on Nasty Weekly Rejection in Gold
- Gold puts in a nasty reversal bar after trying to sustain above 2011 trend-line
- Silver broke month-long upward channel, could soon trade towards 16.25 if…
- Gold can’t hold intermediate-term support surrounding 1260
What’s driving precious metals? Find out in our market forecasts.
When we last took a look at gold and silver prices, the yellow metal was trading well above the 2011 trend-line on a daily closing basis, but not convincingly on a weekly basis. Given the duration of the trend-line and problems gold has had over the past year to cross above this all-important threshold, it’s the weekly close we want to see if we are to turn outright bullish on precious metals. Not only did gold fail to close solidly above, but a huge bearish rejection bar formed by week’s end. This shifts the focus back on intermediate-term support surrounding 1260. How it holds here will be key. A clean break into the 1250s will validate the rejection and clear the path of least resistance lower. If gold can maintain and work its way back above last week’s high (the April peak), then a constructive outlook will gain traction again.
Looking to silver, last week’s break ripped through the lower parallel in place since the earlier-part of May. In terms of levels, silver still isn’t providing the same clarity as we are seeing in gold. One thing is for sure, it’s clearly the weaker of the two. With that in mind, should gold fold, silver is likely to take a sizable hit. There is a confluence of trend-lines extending higher from December of both 2015 and 2016. The area of confluence arrives around 16.25/15. If gold maintains support it's presently testing, then silver will turn higher with it; but, again, at this time there isn’t the same clear-cut levels to operate off of as there is with gold. This keeps our attention more focused on gold price action.
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---Written by Paul Robinson, Market Analyst
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