What’s inside:
- Silver short-term bounce fizzles as resistance in low-17s proves too much
- Support close at hand, but gold has room to go and will likely keep pressure on silver
- Key levels and directional considerations outlined
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In yesterday’s webinar, we looked at the price action in precious metals and noted the bounce as looking vulnerable, especially in silver. From a pure price action standpoint, the channel-break on 9/18 set the stage for lower prices, and from a market positioning perspective a large speculative long position (fuel for selling) had been built up in the futures market during the July-September rally. The initial break took silver down to support surrounding the low-17s, where it then subsequently broke and led to the retest prior to yesterday’s drop. The decline in yesterday’s session further cements the area in the 17.00/30 vicinity as resistance in the near-term.
Looking lower, support arrives not far from here; targeted levels begin at 16.71, then 16.56, and with aggressive selling at some point 16.09 could come into play. The 16.71 low created on 8/25 could prove to be difficult to break on an initial attempt as it was a final jab lower during a congestions phase before rallying two-weeks straight. But overall, price action is still indicative of a market wanting to head lower.
Silver: Daily
Keep an eye on gold and a close below the 1288 level…
Gold saw more of a bounce than silver but was still viewed as more likely a selling opportunity than buying. The recent lift came from right around a period of consolidation in August, but with another round of selling gold is back below the double-tops created in April/June. The 9/21 low clocks in at 1288, and with a breakdown we’ll look to 1275 as the next level of support – the 8/25 jab-day low before shooting higher by over $80. This is the equivalent of 16.71 for silver (given silver is weaker than gold, if gold heads towards 1275, the 16.71 line discussed earlier is not likely to hold; hence keeping an eye on gold weakening below 1288 on a closing basis is important).
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Gold: Daily
---Written by Paul Robinson, Market Analyst
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