Silver and Gold set up for a bullish rally

Oct 14, 11:40 am
gold and silver 170415

The precious metals markets enjoyed a strong rally over the past few weeks but the bull rally is due for a short term correction. The bias remains to the upside for both the Gold and Silver markets. For the week, Silver is up 0.12% while Gold has gained 0.84% for the week after prices retreated off the weekly highs near 1176 and 16.09 at the time of writing.

Gold prices are looking increasing bullish with the weekly charts pointing to a strong descending triangle pattern with prices currently attempting to breakout. We expect to see a dip to 1130 support. If support is held on the weekly charts, Gold prices could see a continued rally on break above the immediate resistance at 1180.5. This would potentially open the gates for an imminent rally over the medium term as Gold prices could target 1310

XAUUSD – Weekly Chart, 14/10
XAUUSD – Weekly Chart, 14/10

On the 4-hour chart time frame, Gold is currently looking to retreat off the weekly highs but remains supported above 1164. If support holds, Gold could potentially test the highs of 1180 before correcting lower. Support to the downside comes in at 1140/1139 region followed a stronger support zone that is established at 1125 through 1120 region. The bullish bias from the weekly chart points to a dip towards 1130 region and taking a cue off this on the 4-hour chart, we can expect a possible retest to this support zone. If prices close below 1120, the bullish bets are likely to erode.

XAUUSD – H4 Chart: Potential correction overdue
XAUUSD – H4 Chart: Potential correction overdue

Silver prices are potentially aiming for a test to 16.82 in the medium term provided prices can hold above 15.58 through 15.25 level of support. The bullish bias comes off the bullish corrective divergence where the RSI failed to confirm the lows by the RSI. A retest to 16.82 will mark a correction while resistance comes in at 17.6. A rally towards this resistance could turn Silver prices increasingly bullish.

XAGUSD – Weekly Chart: Bullish bias
XAGUSD – Weekly Chart: Bullish bias

On the 4-hour chart time frame, Silver prices are in the process of forming a bearish corrective divergence, which points to a correction towards 14.95 level of support on a break below 15.69. This would mark a correction to the medium term trend while the weekly bullish bias to 16.82 remains intact. A close below 14.44 level of support could potentially upset the bullish outlook on the weekly charts.

Silver: H4 Chart – Correction overdue
Silver: H4 Chart – Correction overdue

In terms of the fundamentals driving the markets, the precious metals are likely to react to the FOMC meeting which is due in two weeks time. While it is hard to predict how the Gold and Silver markets will react, the falling bets on a fed rate hike is starting to make the precious metals bullish in the near term. The weaker US Dollar is also helping the metals market to gain some ground.

(Visited 16 times, 1 visits today)

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.

Follow Me:
Twitter