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Gold, Silver Price Analysis: Key Levels to Watch for XAU/USD, XAG/USD

Gold, Silver Price Analysis: Key Levels to Watch for XAU/USD, XAG/USD

Daniel Moss, Analyst


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Gold, Silver, XAG/USD, XAU/USD, Technical Analysis – Talking Points:

  • Long-term technical analysis suggests precious metals may gain ground in the coming months.
  • Gold prices perched constructively above range support.
  • Silver prices continuing to track the uptrend extending from the March 2020 lows.

Gold prices have notably stagnated in a frustratingly tight range in recent weeks, while silver has stormed higher on the back of a Reddit-induced buying spree. Long-term technical analysis, in tandem with rising inflation expectations and falling real rates, suggests that this lull for gold prices may prove short-lived. Here are the key levels to watch for gold and silver.

Gold Price Weekly Chart – Cup and Handle Patten Hints at Gains

Gold price weekly chart created using Tradingview

As mentioned in previous reports, the weekly timeframe highlights the formation of a bullish Cup and Handle pattern that has been carved out over the past decade. This implies that an impulsive topside move could be on the cards.

That being said, with price continuing to track within the confines of a Descending Channel, a retest of range support at 1780 – 1800 could be on the cards. However, the trend-defining 50-week moving average (1810) could limit gold’s downside, given price has failed to break below it since early 2019.

Ultimately, a weekly close above the 8-week exponential moving average (1851) and channel resistance is needed to carve a path for buyers to challenge the 2011 high (1921). Clearing that probably paves the way for price to retest the record high set in August of 2020 (2075).

Alternatively, a weekly close below 1780 could trigger a more extended pullback towards the June 2020 low (1670).

Gold Price Daily Chart – Hovering Above Key Range Support

Gold price daily chart created using Tradingview

Zooming into the daily chart suggests gold prices could be at risk of further declines as price slides below the sentiment-defining 200-day moving average (1851).

With the MACD indicator and RSI tracking below 50, the path of least resistance seems skewed to the downside.

However, if range support at 1815 – 1825 successfully stifles selling pressure, a rebound back towards channel resistance and the 100-MA (1874) could be on the cards. Hurdling that likely brings up the January high (1895) into the crosshairs.

Conversely, a daily close below 1815 could propel price back towards the 50% Fibonacci (1763).

Silver Price Monthly Chart – Bull Flag in Play

Silver futures monthly chart created using Tradingview

The long-term technical outlook for silver also hints at further upside, as price carves out a Bull Flag continuation pattern after validating the topside break of a 40-year Cup and Handle pattern.

A monthly close above the 1980 open (30.05) would probably signal the resumption of the primary uptrend and generate a push to probe psychological resistance at 40. The Bull Flag’s implied measured move suggesting silver could climb to test the 46 mark.

That being said, failing to gain a firm foothold above 30 could open the door for sellers to drive the price of the precious metal back towards flag support at 22.

Silver Price Daily Chart – March Uptrend Guiding Price Higher

Silver futures daily chart created using Tradingview

Scrolling into the daily timeframe bolsters the bullish outlook depicted on the monthly chart, as price continues to track above all 6 moving averages and continues to respect the uptrend extending from the March 2020 nadir.

Staying constructively positioned above the 8-EMA (26.72) could open the door for price to retest the January high (28.10), with a daily close above needed to bring the yearly high (30.35) into focus.

However, slipping back below the monthly low (26.35) could ignite a pullback to confluent support at the 50-MA (25.32) and 11-month uptrend.

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.