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Gold and Silver Technical Outlook: Price Action Suggests Lower Levels

Gold and Silver Technical Outlook: Price Action Suggests Lower Levels

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Gold/Silver Technical Outlook:

  • Gold reversal on Friday points to lower levels in context of downtrend
  • Silver remains confined within a channel, renewed weakness anticipated
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Gold reversed hard on Friday, and within the context of a downtrend this puts in position to trade lower. It is likely that we see follow-through on the reversal candle soon if it is to hold its bearish implications.

The general vicinity in which gold currently trades is a bit sticky with several inflection points since last year occurring around the 1765 area.

As long as the Friday high at 1781 isn’t breached on a daily closing basis, the current bearish outlook will remain intact with the September low at 1721 and March 2020 slope in focus as the next levels of support. A breakdown below this confluence in support will have a very big spot in play down around 1676.

Should we see gold sink to that point it will be a massive test as that level has held as resistance and mostly support on numerous occasions since early 2020. It would be a line-in-the-sand for the macro picture, one that could determine the next major price movement out of gold.

On the flip-side, should the Friday high get taken out, then the outlook only brightens mildly as price will be running against the general tides and quickly into resistance via a trend-line from May and the 200-day moving average. They are currently in exact confluence.

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Gold Daily Chart

Gold daily chart

Gold Chart by TradingView

Silver posted the same bearish reversal on Friday, and did so at a solid trend-line of resistance coming down from June. As long as silver stays below the Friday high at 23.18 and within the confines of the channel dating back to late spring, then the outlook will remain firmly bearish.

A decline below 21.42 will put silver in position to trade towards a high created in 2019 at 19.28. It’s a big drop from here, but not out of the question in the near-term as silver has a tendency to move with momentum once it gets rolling.

Silver Daily Chart

Silver daily chart

Silver Chart by TradingView

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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.