Gold Needs A Silver Bullet

Another weekend of potential headline-driven volatility is negotiated safely, putting precious metals under pressure to start the week.

GOLD

Gold opened lower in early Asian trading, falling seven dollars from its New York close at 1297.00 to 1290.00 as weekend uncertainty passed without incident. Merkel’s win in the German federal elections and a  quiet news weekend on the North Korean front, saw the U.S. dollar opening stronger and gold’s weekend safe-haven premium eroded from Friday.

 

Gold has bounced slightly to trade at 1292.85 but is now well below its 1296.00 breakout level with a daily close below here implying a deeper correction is possible. Gold is now mid-range between its 38.2% Fibonacci at 1299.00 and its 50% Fibonacci at 1281.00, and for longer-term bulls, this region is where gold’s correction should base. A break of the later level would suggest that the bull run has come to an end for now.

 

Intra-day gold has support at 1288.00 with resistance at 1296.00 and 1301.00. The Asian session’s performance will now be dictated by whether most of the weekend risk hedges have already been unwound and geopolitical headlines.

Gold Daily

SILVER

Silver too is approaching the region between it’s 38.2 and  50.0 % Fibonacci retracements, where, if the bull market is to continue it should make a longer-term base. The technical picture though is somewhat more cloudy.

Silver broke its long-term support at 17.4550 last week and kept on falling. Furthermore, it has broken through its 200-day moving average at 17.1250 and seems poised to attack its 100-day moving average and initial support at 16.8900. A break of this level could imply a further drop to the 50.0% retracement at 16.5700.

The 200-day average at 17.1250 will offer resistance to any bounces before 17.4000 appears on the horizon.

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 Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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