Gold & Silver Update – 12th March

Gold heading to $1140 support

With the support level at 1203 – 1197 failing to hold prices, Gold futures tumbled breaking down below this critical support level. Price action on the daily charts shows Gold now inching closer to the next support at 1141 levels, which could probably contain prices for the short term. Failure to regain bullish momentum from the previous support has shown that Gold could possibly be heading back to bearish territory in a few weeks time.

From the weekly charts, we also notice that price is currently moving out from the major support/resistance level. We would of course need to see a clear exit from this level to ascertain the bearish view. A confirmed bearish close below 1171 could see the larger term declines come into play as Gold futures could likely prepare for a new leg in declines in the next few months. This would also validate the longer term descending triangle pattern shown on the weekly charts below, which could see 1100 and eventually 1000 being achieved quite easily.

And finally, looking to the monthly charts, it is quite evident that the next major support comes in at 1082.15 levels. The monthly charts indicate an inside bar being formed a month ago with the current monthly candlestick turning bearish. However, it is important to bear in mind a possible fake move considering there is still a few weeks left in the month of March. So unless we see a bearish close on the monthly candlestick charts, it would be best to apply caution.

Silver futures have also turned around and on the monthly charts look to be currently testing the 15.5 support level. A break of this support would possibly pave way for declines, but are likely to be more gradual and limited compared to Gold futures. Similar to that of Gold monthly charts, Silver futures also printed an inside bar on the monthly charts and we would need to see a confirmed close to the downside before we can expect further declines.

Switching to the weekly charts, price action indicates to a continued decline with 14.59 being the next support level for Silver prices to tackle. Failure to break out from the falling price channel indicates that Silver could probably be resuming its downtrend. A confirmed close inside the falling price channel could give the first indication of a turnaround completed in the weekly charts.

However, it is important to note that just below 14.59, the next major and a strong support comes at 12.5 area, which markets a major longer term rising trend line. We could very well expect to see price bounce initially on a touchdown to the major trend line that has been well respected over the years.