Gold and Silver Technical Updates

Gold (XAU/USD)


Expansion Targets Reached: Taking the rally from the Jan. low to the Apr. high, and swinging it from the May low near 1475, gold has reached the 150% fibonacci expansion projection near 1860. 1892.50-1900 is next.

  • The 4H chart shows a bullish market with persistent bullish momentum as the RSI reading maintained above 40, and always broke above 70 when it came up from its lows, which were near 50.
  • The daily chart also shows a bullish momentum, so the mode for the medium and long-term is bullish.
  • This will reach the 161.8% expansion level near 1892 seen in the daily chart. In the 4H chart, a swing projection sees a target slightly above 1900.
  • With gold at record territory, only trading restrictions or a trend of risk appetite can stop it from further targeting the 2000 milestone.

Silver (XAG/USD)


Silver finally is confirming a break from the consolidation zone roughly between 33.00 and 39.50. It is not as strong as gold but is bullish. However, it is much choppier than gold. Besides silver seeing trading restrictions in late April and Early May (higher margin requirements), it also has industrial uses. It therefore is not a pure safe haven like gold. Nonetheless silver this week proves to still have a bullish stance.

  • The 4H chart shows the RSI breaking way above 70, a clear sign of bullish momentum established in the short to medium term.
  • Silver has been trading above the 200SMA in the 4H chart as well, another reflection of its bullish stance.
  • The daily chart shows the sequence of a breka above 39.50-39.60 resistance, a throwback that respected the middle of the previous sideways range, and now a bullish breakout confirmation.
  • The 43.00 level is the near term target as it is the 61.8% retracement level and may provide some resistance.
  • Above that the 45.85 level is the 78.6% retracement target, and also a range-breakout target. (taking the width of the range and projecting it to the direction of the breakout.
  • Above that we can be retesting the 2011 highs in the 49.50-49.85 area.
  • A break now back below 39.50 kills this bullish outlook, and suggests further sideways action.

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Fan Yang CMT
Chief Technical Strategist