Forex Trading Library

Precious Metals Trends: Gold Prices Might Bounce

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For the past two weeks, metals have been declining gradually after multiple months of gains, leading both Gold and Silver to rise to new levels, not seen since the end of last year.

Moreover, both metals have broken above key resistance areas, which keeps the possibility for further gains unchanged.

However, as we noted in our last week’s reports, the downside correction was needed before the upside trend resumes.

Indeed, since then, both metals eased back gradually, and they are both nearing former resistance areas, which switching into solid support area ahead.

In today’s article, we will have a look at both metals from a technical and fundamental point of view, speculating the possible trends ahead and where are the possible levels where the buyers are likely to appear.

Fundamental Catalysts Ahead

In the next few days, there are many economic figures and events will be released, which likely to have a direct impact on metals.

As for today, It is considered as one of the most important days of the week as we wait for the US ADP Non-Farm Employment Change, which will give us some clues about Friday’s Jobs Report (Non-Farm Payrolls).

However, the most important event is the Federal Reserve meeting later tonight (FOMC Statement), which likely to have the biggest impact on the markets, especially if the Federal Reserve continues to talk about raising rates further and the ongoing discussion about unwinding the Fed’s balance sheet.

As for the rest of the week, the US Jobs Report would be another key event to watch, in addition to the long-awaited French election on Sunday, where it might lead to some notable gaps next Monday.

Gold Testing 200 DAY MA

Gold has been declining for the third consecutive weeks including this week, declining all the way back from 1294 all the way back to 1253 earlier this morning.

Gold is now trading at its 200 DAY MA on the daily chart for the past three days, with no clear break below that support until this report is released.

Such stabilization might be the first sign of the upcoming possible bounce ahead, especially if fundamentals comes in in favor of buyers.

Technical indicators are also heavily oversold, which increases the possibility for another bounce ahead, probably later this week.

If Gold managed to stabilize above the mentioned MA, which also is a confluence with Gold’s former resistance, buyers are likely to appear around today’s lows.

The next bounce target would be another high of the year. Otherwise, a deeper retracement could be seen all the way back to $1240.

Silver Retraced By 61.8% Once Again

Looking at Silver’s daily chart, we can notice that it already broke through its entire moving averages in addition to its daily uptrend line.

Any beginner trader would say that this is a sign of further declines ahead. However, there is a different story to this chart.

Last time, Silver spiked right from its 61.8% Fibo, and today Silver is testing the same level once again around 16.80.

Silver has been trading above that support for the past three days, which shows that there are some buyers.

Moreover, the technical indicators are heavily oversold, which also supports the idea of a recovery from the current levels.

If so, the first immediate resistance for Silver stands at 17.0 and 17.20, while only a weekly close below the 61.8% Fibo which stands at 16.80 would change the current outlook from bullish to neutral.


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