Gold Prices & Silver Technical Outlook:
- Gold prices rallying towards top of macro-wedge
- Resistance is resistance until it’s not
- Silver continues to lag as per usual
See what intermediate-term fundamental drivers and technical signposts our team of analysts are watching in the DailyFX Q2 Gold Forecast.
Gold prices rallying towards top of macro-wedge
Over the past few sessions gold prices have gone from testing intermediate-term support (August trend-line) to setting sights on major long-term resistance (top of 5-year wedge). We have been here before, not long ago in February gold was probing the wedge-ceiling before failing just shy of 1347.
How gold prices respond soon could have major macro implications. Resistance is resistance until proven otherwise; In February and Jan-Mar ’18 gold posted volatile turnabouts when the long-term threshold was pressed upon.
We will be watching for more signs of the same, or whether this time could finally lead to a break-through and sustainable trend beyond the confines of the massive wedge. The 1347/66 zone should prove formidable. Reversal price action around there could turn the near-term bias back in favor of sellers.
However, a breakout above the aforementioned zone and weekly close beyond 1375 would be considered a major event. Given the long-term duration of the pattern (dating back to 2014) a weekly closing breakout is required to validate. Given the size and duration of the pattern a 20%+ move could be in store.
But again, before getting ahead of ourselves, we need to see how gold responds to major resistance. It’s looked poised to make an explosive move before only to fail.
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Gold Prices Daily Chart (Watch price action as big levels near)
Gold Prices Weekly Chart (Major resistance, 1375+ needed for breakout)
Silver continues to lag as per usual
Nothing new here, silver is lagging behind gold. It does have potential to squeeze a bit, though. The other day if finally broke a steadfast trend-line running off the February peak and is currently challenging the 200-day MA. Further strength could have silver running towards trend-lines from July ’16 and April ’17.
To reach the latter trend-line a breakout in gold is likely needed, but the 2016 t-line could come into play relatively soon. Keep an eye on gold as it tries to work into resistance, a turnabout in gold, with silver still relatively weak, could lead silver back towards recent lows or worse.
Silver Price Daily Chart (may head towards '16 t-line)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX