Gold & Silver Technical Analysis

A meteoric rise fueled by the geopolitical context and technical signals that indicate a possible lull. A welcome lull, but most likely temporary.

Gold & Silver Technical Analysis

The yellow metal makes a breakthrough

Gold expressed in US dollars has gained +15% in just over a month, from its February low to its March high.

It is currently trading near the psychological barrier of $2,000.

In intraday trading, it is re-testing this resistance which has become a support.

On Monday, March 8, it hit the $2075 area, the previous historical high recorded in August 2020.

Source: Tradingview

The yellow metal has drawn a nice cup and we would like to see it draw a clean handle to indicate a solid trend continuation.

There are a few things that point to a possible momentary lull:

  • An all-time high to work with (with a handle)

  • An RSI at 72 indicating entry into the overbought zone

  • The upper Bollinger band has been exceeded for 4 weeks.

Reminder: Technical analysis does not predict the future, it offers us probabilities. These can be swept away in the event of an increase in geopolitical tensions and an irrational surge.

In terms of targets: the closest would be in the $2150 area if we shift the amplitude of the triangle by about 15% at the breakout.

Then comes the $2300 area if we shift the amplitude of about 10% between the historical high and the pivot (purple line).

For technical analysis enthusiasts, let's look at the Fibonacci retracement for the formation of the handle.

Source: Tradingview

If we retrace to the pivot point around $1875, we see that the intermediate levels are relatively close to the previous levels observed when the cup formed: 1995, 1970, 1950, 1920.

So, if the cup forms, how far will it go? All bets are off.

Grey metal in ambush

Silver gained +23% between February 3 and March 8 and is currently trading around $26/ounce.

Source: Tradingview

Unlike gold, it is still far from its historical high of $49.7.

But we note that the break of the $25 pivot that started at the end of February is confirmed and silver is re-testing this resistance turned support.

We hope to see the gray metal come to seek the next resistances around $28 and $30 to be able to finally break out of this horizontal consolidation channel started in August 2020.

The odds tell us that it should follow gold's trend with some lag, as usual.

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See you soon,

The GFI team

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