Gold and Silver continue their healthy consolidations as we reach the week’s end, ignoring North Korea’s latest missile test.
Gold rose slightly this morning after the latest North Korea missile test, but overall, the reaction was muted. Gold touched 1334.00 before falling back just as quickly to the unchanged level of 1330.00 in Asia trading. We would expect dips to be sought after in Asia and North America today as trader put on weekend risk hedges, but it would appear that a certain level of North Korea apathy has set in as the big dollar marks time into the end of the week.
Although gold has fallen from extremely overbought levels in the short term, the longer term picture will remain constructive. Pleasingly, the Relative Strength Index (RSI), has now fallen from stratospheric overbought levels to neutral ones. We cannot rule out further corrections and a retest of the pull back lows of 1315.00, but the technical picture remains constructive as Long as the 1296.00/1300.00 breakout levels remain intact on a daily closing basis.
Gold has nearby resistance at 1335.00 followed by 1347.00, a level unlikely to be seen ahead of the weekend. Given it has held up very well in light of the overnight higher U.S Core CPI data, Traders will be closely watching this evenings Retail Sales numbers. Another better than expected number could lead to U.S. dollar strength and continue to cap gold into the weeks end.
Silver meanwhile, continues its corrective pullback as well.Overall it has held up better then gold but faces short-term resistance at 17.8800, just above its current 17.7900 trading level. Beyond there looms the 18.2500 area, the previous high, which will be a far more formidable test.
While its RSI has also moved back to neutral, a retest of 17.6000 support cannot be ruled out. However longer term support at 17.2800 is the key technical support and Silver’s longer-term picture remains sunny as long as this holds.