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Gold & Silver Price Analysis – Looking for More Downside

Gold & Silver Price Analysis – Looking for More Downside

2018-10-31 08:04:00
Paul Robinson, Currency Strategist

Gold/Silver technical highlights:

  • Gold turn off resistance has two variations of support in view
  • Silver bear-flag points to new cycle lows

See where DailyFX analysts see Gold heading into year-end and the expected drivers in the Q4 Gold Trading Forecast.

Gold turn off resistance has two variations of support in view

It has been a battle between sellers watching the Dollar rally and safe-haven buyers watching stocks tank, but for now the sell-side is starting to take control. Looking at price action in gold only, confluent resistance via longer-term price levels and the top of an intermediate-term channel kept a lid on the recent advance.

Friday’s key-reversal was the first sign this may be the case, and now we are seeing gold sink quickly towards its first level of support in the 1214/10 region. The upper part of the Aug/Sep range may help put a floor in, but should it fail to do-so then then the lower parallel of the channel will be targeted. The thinking on this end is that we will see the lower part of the channel.

Tactically, the key-reversal on Friday offered a sign of rejection and measure for assessing risk for shorts (stop placed above high), but now risk/reward for new positions has fallen out of favor. Take-profit/trailing stops may serve well should price sink into support levels. Would-be longs can watch how things play out in the 1214/10-area, and if buyers fail to show up there then look to see how price action unfolds upon a test of the lower channel around 1200.

Gold traders still remain quite long, check out IG Client Sentiment for details as to how this information can be used.

Gold Daily Chart (Watch how support is treated)

gold daily chart, watch how support is treated

Silver bear-flag points to new cycle lows

Silver has long been lagging gold on the top-side and leading on the down-side, and nothing here has yet to change. The bear-flag it is breaking out of now is viewed as helping silver along to a new low in this current down cycle. A drop through 14.26 will have 13.94 in focus, then the December 2015 low at 13.65. On the top-side, still maintaining a stay-away stance from silver, instead opting for gold longs on bullish set-ups in precious metals.

Silver Daily Chart (bear-flag)

silver daily chart, bear-flag

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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