Forex Trading Library

Gold and Silver Keep Going, But Retracement Is Close

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Gold and Silver keep pushing higher since the beginning of the year, adding more than 10% of gains so far, outperforming some indices and other asset classes.

Last week, both posted a new year high. Gold spiked above 1290, while Silver managed to touch 18.50. Despite the recent rally with a clear breakout of the previous highs of this year, traders should be very careful as a short term retracement might be ahead of us.

After reaching out entire targets mentioned in our previous reports last week, I believe it’s time for a pull back, before jumping into another bull run.

Gold Possible Retracement Ahead

Gold prices managed to rise on many factors, including weaker USD, rising inflation globally and the recent geopolitical tensions between the US and its allies and North Korea.

Gold managed to break above many technical levels, which increases Gold bullish outlook for this year. Gold managed to close last week’s trading above its 200 DAY MA for the first time since November of last year, while the 50 and the 100 DAY MA’s are still rising gradually.

However, the technical indicators now are heavily overbought on most time frames. On the daily chart, RSI is trading above 70 and turning slightly lower after yesterday’s Decline.

As for stochastic oscillator, it’s trading above 80 but crossed over to the downside due to yesterday’s decline as well.

In the meantime, those indicators are suggesting a short-term retracement, which could be seen in the coming days.

The most likely scenario for gold is to retest the recent top around 1263, where buyers are likely to appear. Moreover, the 200 DAY MA is now trading around 1255. Those levels would be out first immediate support to watch for the buyers.

On the upside view, 1295 followed by 1300 and 1304 former resistances would be our next targets which could be seen either next week of the week after.

The current bullish outlook for this year remains unchanged as long as Gold stays above $1200

Silver May Retest $18

Silver managed to rise last week, but Gold outperformed silver this time. Silver managed to break above its year’s high and closed Friday’s trading around that solid resistance at 18.50.

At the beginning of this week, Silver tried to push higher, reaching as high as $18.67. However, it failed to hold and retreated to 18.40 earlier this morning.

In the meantime, Gold and Silver has the same story from a technical point of view. The technical indicators are heavily overbought.

Yesterday’s declines have led to a crossover to the downside, which increases the chances for a possible retracement ahead.

Silver is likely to retest its 200 DAY MA once again, which stands at $18.0 where buyers are likely to appear. However, there is still a possibility for deeper declines to retest its 50 DAY MA which stands at $17.85. Those levels are considered the first immediate support for the current possible retracement.

On the upside view, the first immediate resistance remains at 18.50 and 18.67 (this week’s high), while a break above that resistance is needed to clear the way for further gains ahead, possible toward $19, which could be seen in few weeks.

The silver bullish outlook for this year’s remains unchanged as long as the uptrend line remains intact which stands at 17.90.

Only a weekly close below that support would change the bullish outlook back to neutral.


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