Gold Price and Silver Outlook: Will First Levels of Support Hold?
Gold Price & Silver Technical Outlook:
- Gold pulling back into channel support from long-term resistance
- Silver undergoing sharp correction, at steep line of trend support
For an intermediate-term fundamental and technical viewpoint, see the Q3 Gold Forecast.
Gold pulling back into channel support from long-term resistance
The long-term resistance zone from around 1522 up to 1575 has indeed proved to be problematic as the recent decline has gold trading at the same levels it was at a month ago. This morning, weakness has brought into play the first line of support to watch.
The rising lower parallel of a channel dating back to the tail-end of May looks to be buyers first opportunity to look for gold to hold. From here a push back higher won’t leave a lot of room, though, before the long-term zone of resistance could become a significant obstacle again.
Instead of a push on through gold may want to correct further either through price retracing and/or time, that is, a move sideways may unfold. A bounce from here that fizzles could build a head-and-shoulders top that leads to a larger corrective move.
This scenario is seen as having a higher than usual chance of occurring because of the resistance zone capping the pattern. But first up is seeing if channel support can at least keep price propped up as it battles as the battle at resistance has yet to resolve. It will be difficult to be outright bullish until those levels from the 2011/12 topping process are cleared.
Gold Price Daily Chart (channel support up first)
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Silver undergoing sharp correction, at steep line of trend support
Silver having gone parabolic is unsurprisingly experiencing a strong retracement. It could certainly use some time to digest the gains from June to the early days of this month. Right now, price is sitting on a support line from July. It may get a near-term bounce, but, again, given the type of rise that just took place a larger correction is needed.
Silver Daily Chart (steep trend-line, needs more time correcting)
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---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.