Gold Follows the Silver Bullet Higher

Gold shrugs of a stronger dollar to post an impressive recovery, but it is silver’s rally that will have grabbed technical analysts attention.


Down, but not out, best describes gold’s price action on Friday. Having sold off to a low at 1260.00, gold staged a remarkable 18 dollar comeback to close at 1278.00 as news emerged that North Korea may be about to test a new missile capable of reaching the United States. The rally has continued this morning with gold moving to 1284.50 as China returns from holiday. Iranian sabre rattling, Trump remarks on North Korea and further details of the proposed missile test have injected a geopolitical risk premium back into the yellow metal.

Admittedly gold was approaching a technically oversold condition in the short term anyway. The key now will be if the rally can maintain its longevity once the dust settles and in the face of higher U.S. yields and a stronger U.S. dollar.

From present levels, gold has resistance at 1291.00 and 1296.00. On the downside, the 100-day moving average at 1273.501 should provide initial; support ahead of Friday’s lows at 1260.00. We expect that gold will trade with a bid tone in Asia today but will be vulnerable to headline created movements ahead of this weeks data highlight, the U.S. FOMC minutes.

Gold daily


Silver ‘s technical picture is altogether more favorable to gold. Silver held around its Fibonacci 50% retracement level at 16.5750 for the past week; silver collapsed to 16.3350. It was the price action from there that was particularly interesting though. Racing higher to 18.6600 and in the process creating a bullish outside reversal day.

Silver has followed gold higher this morning and is now trading at 16.9540, just above its 100-day moving average at 16.9043 which capped its gains all of the last week. A close at these levels implies that silver has made a serious attempt to base in its longer-term 38.2/50.0% Fibonacci retracement box.

The next resistance is at the 17.0000 regions which silver almost reached this morning, followed by the 200-day moving average at 17.1650. Support rests at 16.7900 and the now distant Friday low at 16.3350.

Silver Daily

Silver’s price action is particularly constructive given the general strength of the U.S. dollar and its lower beta to geopolitical noise then gold. Time will tell as to whether this reflected its more oversold condition, or whether it is a general signal that the worst may be over for the precious metal correction.

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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