Precious Metals – Weekly Technical Analysis, 28/10

Oct 28, 6:19 am
Silver and gold coins

Gold futures have gained 0.5% for the week as the inside bar formed off last week’s session is indicative of a potential break out in either direction. The range high low of 1191 through 1151 will be of interest as a break out in either direction could see a follow through. To the upside, the resistance as 1223.5 remains the most likely target in the medium term while to the downside, a break below 1151 could see a test back to 1140 lows

XAUUSD – Weekly Chart: Triangle Breakout
XAUUSD – Weekly Chart: Triangle Breakout

On the daily chart, Gold futures are currently attempting to retrace the breakout from the rising wedge/triangle pattern but a test to 1155/1153 level of support/resistance remains to be tested. Failure to close above the previous highs of 1191 could signal a move to the downside however.

XAUUSD – Daily Chart 28/10
XAUUSD – Daily Chart 28/10

On the 4-hour chart time frame, Gold futures are currently trading near the support/resistance level. However the Stochastics oscillator points to a bearish divergence taking shape which could see a possible decline to 1150 level in the near term. This is however, provided that prices fail to find support above 1170 level.

XAUUSD – H4 Chart, Bearish Divergence
XAUUSD – H4 Chart, Bearish Divergence

Silver prices continue to look range bound in the near term despite gaining 0.75% at the time of writing. With prices comfortably settled above the support of 15.64, the longer term bias to 17.55 remains very likely in the longer term.

XAUUSD: Weekly Chart: Triangle Breakout
XAUUSD: Weekly Chart: Triangle Breakout

On the daily charts, prices have failed to retest the break bout level near 15.2 through 15.1 and have managed to trade above 15.64 level. However, the strong consolidation seen above 15.64 is likely to keep prices trading sideways above this support. Looking to the Stochastics oscillator there is a bearish divergence being formed which could indicate a possible move to the downside, preferably back to 15.2 through 15.1 level of support.

XAGUSD H4 – Bearish Divergence
XAGUSD H4 – Bearish Divergence

The precious metals are likely to turn volatile today as the Federal Reserve meets for its monetary policy review. No rate hikes are expected today but the markets will look to the FOMC’s statement for any clues into December rate hikes. A no rate hike today could mean precious metals could possibly rally in the near term, however the scope of the rally could depend on the market sentiment as well. Both silver and gold have remained range bound for the past few months and we could expect this to change some time soon with the bias remaining to the upside in both the metals.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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