Gold/Silver Technical Outlook:
- Gold pulling back after posting reversal candle at resistance
- Silver doing similar, looking to see if both metals can hold a rally
Spot gold (XAU/USD) has recently rallied strongly from around longer-term support, which as of yesterday brought into play a trend-line from March and a meaningful swing-low from May. The May low was also further validated on July 1 as a good level before gold melted down.
At any rate, resistance was met yesterday and a strong reaction occurred off of it; not too surprising given that the run off the low had yet run into any kind of meaningful opposition. Yesterday’s candle points to the beginning of a testing period for the bounce off the low.
Since the beginning of the year gold has been in a firm downward trend and rallies have failed, but this time around could play out differently. What I will be watching for is a retracement of the rally off the July low and whether buyers step in without too much of a decline developing.
There is a channel in play on the 4-hr worth watching, with 1739 as a horizontal level to keep an eye on. A drop to that point might be a bit much to keep the upside intact, though. Ideally, we see gold meander sideways for a short while and then try and break out above 1787 resistance. If we see resistance overcome then a rally could develop well into the 1800s, or higher.
Gold (XAU/USD) Price Daily Chart
Gold (XAU/USD) Price 4-hr Chart
Silver (XAG/USD) is in a similar boat, of course, and on that I will be watching the same type of price action to play out. A climb above 20.49 will have resistance broken and silver trading into open space again. Before doing so it would be good to see it digest recent gains without much of a retracement.
Silver (XAG/USD) Price Daily Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
