Precious Metals Give Bullish Traders Relief

Precious metals benefit from the street’s mass dollar exit on Friday with both gold and silver making pleasing technical developments.

Gold

Gold’s umbilical-like inverse price action to the U.S. dollar has been once again underlined on Friday. As the U.S. bowed before all and U.S. yields dropped, Gold rocketed higher and closed 15 dollars higher at 1293.85. From a technical perspective, the much-maligned yellow metal’s price action over the past week has been very decisive. It has held its 100-day moving average over the past week on a closing basis. The attempts on its trend line support have also been repelled in no uncertain terms.

All of this will be music to the ears of long-suffering bullish traders, especially on the futures market where positioning is running a 50% of its yearly peak. The charts suggest that gold is attempting a meaningful topside breakout. It closed just above its double top resistance at 1291.50 on Friday in a pleasing technical development.

With the dollar slightly higher in Asia today, benefiting from the temporary travails of the Euro, gold has slid $1.50 to 1291.75. Intraday support is at the day’s low at 1291.15 followed by some clear air to the 100-day moving average at 1280.30 followed by the impressive trend line support line at 1269.20. Resistance appears on Friday’s high at 1297.75 followed by 1300.00 and then 1306.50.

Gold Daily

Silver

Not to be outdone, silver surged higher on Friday as well closing at the double top resistance at 17.2950 from its 17.0780 open. In the process, it carved through its 200-day moving average and over the past week, the trendline support going back to July, has successfully beaten off all attacks.

The trend line support was tested three times over the last week, and the fact that it has held so precisely now lend substantial support to silver. It is further reinforced by the 100-day moving average, with both indicators lying at 16.9240 today.

With the dollar slightly stronger in Asia silver has fallen 10 cents to its 200-day moving average and interim support at 17.1625.

It did not finish on a closing basis above the double top at 17.2950 on Friday, and this will remain interim resistance to start. A daily close above sets up an advance on the 17.4800 level, and a close above that implies silver may rally above 18.0000.

All in all, the technical picture is looking rosy for silver, with the ascending triangle suggesting higher levels await ahead.

Silver Daily

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Currency Analyst
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.