Gold Price & Silver Outlook: Dip, Then Rip?
Gold & Silver Technical Outlook:
- Gold technical posturing taking on the shape of a bull-flag
- Silver outlook not as strong, could post another lower-low
For an intermediate-term fundamental and technical viewpoint, see the Gold Price Forecast.
Gold technical posturing taking on the shape of a bull-flag
Gold price continues its battle below long-term resistance, and this fight may continue for a little while longer before pushing on through to new bull-cycle highs. Overall, though, this is a good thing as congestion phases can bring the power needed to sustain a run, especially when there is resistance as big as what gold is facing from the 2011/12 period.
Price is currently sitting up against an upper parallel running down off the September high. The parallels are becoming part of a developing bull-flag, and while this may be intermediate-term bullish, the downward sloping nature of these formations is still near-term bearish. Lower-lows and lower-highs can continue for an extended period of time before the sequence is broken.
Ideally, another dip lower develops off the upper parallel, and at some point, whether it happens here in the days ahead or just down the road, a higher-low is carved out inside the bull-flag to indicate growing strength. To trigger the pattern a breakout above the top-side parallel will need to take shape, and ultimately gold needs to rise through the resistance zone extending up to 1575 before a much larger rally can commence.
Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.
Gold Price Weekly Chart (2011/12 levels stand in the way)
Gold Price Daily Chart (bull-flag forming)
Silver outlook not as strong, could post another lower-low
Silver is running a bit weaker than gold, not totally unexpected as the rally into the September high was parabolic and in need of a correction. There is trend-line resistance running down off last month’s high that could keep pressure on silver much in the same way as gold.
But it wouldn’t take much to knock silver back to a new corrective low. In my view, the weaker posturing makes silver the better short for now, but like gold should price hold above the Oct 1 low at 16.89, it could give indication of increasing strength. The top-side trend-line will still need to be taken out, though, before longs can gain any real traction.
Silver Price Daily Chart (weaker than gold, Sep t-line resistance)
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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.