Gold Price & Silver Technical Outlook: Support Test Nearing
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Gold Price & Silver Technical Highlights:
- Gold sitting on a minor level of support, break brings into play big support
- Silver price action is choppy, but could be narrowing towards a wedge
Gold weakness could soon bring big support into play
Gold was kicked hard on Monday with the announcement of Pfizer’s progress for a coronavirus vaccine, and on that near-term support from late September at 1848 is under siege. It is has been difficult trying to get a handle on gold with its choppiness, but a test of a long-term support may help bring some clarity.
A drop below 1848 will bring into play levels from the 2011/12 topping process that gold hesitated at back in July before exploding to new record highs. It is also an area where the 200-day moving average happens to moving higher into; 1800 (+15/-15) is looking like a big spot right now.
A drop into support could forge a corrective low in the longer-term trend higher, while a breakdown below will leave the door open for further losses. Watch how price action behaves should we soon see a test take shape – a violent reversal or sudden surge will indicate a strong willingness by buyers to step in.
Gold Price Daily Chart (~1800 a big spot)
Silver hasn’t been as weak as gold recently with it still well above the September low. There are some cross-currents in play as the price action is generally choppy and without directional cues. Overall, despite the two channels in opposing directions forming, price action is starting to wedge up a bit.
It isn’t the cleanest pattern with particularly great symmetry, but it does imply that at some juncture the narrowing range will lead to a breakout. For now, continue to stay on hold while clarity presents itself.
Silver Price Daily Chart (wedge could be forming)
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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.