Gold, Silver Analysis
Gold Eases After Last Week’s Advance
Gold rose last week to end a two-week run of losses but Friday’s price action laid the ground for a potential move lover this week. Friday’s extended upper wick revealed the early sign of a possible pullback developing at the start of this week.
Price action now heads lower, trading down from the $1985 level, with he $1937 level next in view – as support. The $1937 level is significant as it roughly coincides with the 200-day simple moving average (SMA).
In recent trading days, a weaker dollar and easing US yields (Treasuries) have helped prop up gold prices after hitting a low on November 13th – the day before that softer US CPI print that inspired a dollar selloff.
The FOMC minutes offer up a potential catalyst for the precious metal this week as far as it affects the dollar. Other than that it is a relatively quiet week however, a new phase in the Israel-Hamas war could see gold find it feet once more.
Gold (XAU/USD) Daily Chart
Source: TradingView, prepared by Richard Snow
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Expected 30-day gold volatility continues to drop off a cliff after a brief period of consolidation. The longer this trend continues gold is unlikely to spike higher like we saw at the start of the conflict, but the metal is still in a favourable position to capitalize on further USD selling and lower US yields.
30-Day Expected Gold Volatility (GVZ) Source: TradingView, prepared by Richard Snow
Silver Encounters a Challenge at Channel Resistance
Silver also posted an impressive week last week, rising up to channel resistance and the (less significant) 50% Fibonacci retracement. Nevertheless, the metal has started the week on the back foot, with a continued drop opening up $22.35 (38.2% Fib) as a possible level of support. A larger move sees channel support come into play at the 23.6% fib retracement , $20.52.
Silver (XAG/USD) Weekly Chart
Source: TradingView, prepared by Richard Snow
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— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
