Gold Price and Silver Outlook Improve for Longs, but Still Work to Be Done
Gold Price Technical Outlook:
- Gold rallying from support towards top of bull-flag
- Silver breaking out above trend-line, challenging resistance
- USD selling may finally be a boon for precious metals
Gold rallying from support towards top of bull-flag
More than two weeks ago we took a look at gold as it was trading around long-term support via a trio of peaks created in the wake of the 2011 peak. It looked like a potential wash-out move at the time that shook out longs, and indeed so far that is looking to be the case.
As gold rises from support it is continuing to develop a potentially longer-term bullish price pattern that could send it significantly higher in early 2021. Right now the top-side line of the bull-flag resides around the 1910/15 level, depending on when (should) price runs into it.
The pattern could take some more time to form, so if we see another turn lower after hitting resistance the chop could continue and longer-term longs will need to be patient. The trend off the August high is still down, and while it is possible that was a major cycle high it doesn’t appear to be so. Within the context of the broader uptrend the price action since August smacks more of a correction than the beginning of a bear market.
For now, the outlook is semi-bullish up to the top of the developing bull-flag, from there the short-term bias may turn a bit negative if it can’t break out above. The Dollar is below big long-term support and continues to trend lower, so this could help keep gold buoyed as the inverse correlation between the two comes back into line.
Gold Price Daily Chart (rising from support towards top of potential bull-flag)
Silver is trading above the trend-line running down off the August peak, a development that helps strengthen the bullish case. However, there is still resistance to overcome via a horizontal level from around 26 up to 26.40. This zone needs to be breached to really get silver working its way towards the summer high near 30.
Silver Daily Chart (trend-line break has resistance in focus)
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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.