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Gold & Silver Price Analysis – Trend-line Break Brings More Selling

Gold & Silver Price Analysis – Trend-line Break Brings More Selling

Paul Robinson, Strategist

Gold/Silver technical highlights:

  • Gold broke 2015 trend-line, December low
  • Next targeted support down near 1200
  • Silver trading around trend-line from 2003

For the intermediate-term technical outlook and expected fundamental drivers in the months ahead, check out the recently released DailyFX Q3 Gold Forecast.

Gold broke 2015 trend-line, December low

Last week, when we last discussed gold, we said we were looking for the possibility of a larger rebound off the 2015 trend-line if a higher-low could form. But instead of seeing a pullback and higher-low rejection of support, price continued to weaken again.

The big number we were looking at in yesterday’s webinar was 1236, the key to gold’s outlook. A break below not only would have the trend-line firmly broken, but also the December low. With the level in the rear-view mirror, expectations are for more selling.

Gold is currently trading around lower-parallel support from April, but it is viewed as only minor at best given the more important trend-line/December support break. The next area of significance arrives around the July 2017 low at 1205 down to 1195, or the low from March of last year.

Tactically speaking, the path of least resistance is lower: Short-term momentum traders may look to keep pressing on bids, while swing traders may want to wait for a quick bounce before joining in on continued weakness.

Gold traders continue to remain heavily long by a margin of over 5-1; see the IG Client Sentiment page for details as to why this acts as a bearish contrarian indicator.

Gold Daily Chart (Support broken)

Gold daily chart, below 2015 trend-line, 1236...lower levels ahead...

Silver trading around trend-line from 2003

Silver has been a market we’ve tended to shy away from given its erratic nature for much of the year. It’s currently trading around an important trend-line running all the way back to 2003. Given its duration, a weekly, or even monthly close, is needed before we can validate it as a true break. For now, we’ll continue to stick with gold as the preferred precious metal to trade.

Silver Monthly Chart (2003 Trend-line)

Silver monthly chart, 2003 trend-line threatened

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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

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