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Technical Update - 3-5% bearish correction in the cards for Gold and Silver
- Corrections appear to be unfolding in Gold and Silver. Indicators have been signaling that this scenario was likely to unfold for a couple of weeks
- Silver seems to be leading the decline and could sell off as low as 25.50
- Gold could sell off down to the 2,200 area
Gold (XAUUSD) is back below key support at 2,319 after failing to close above 2,350, which would have confirmed the resumption of an uptrend.
If Gold breaks below 2,291, it is likely to face a sell-off down to between 2,260 and 2,255, and possibly even lower to around 2,207, which is the 0.786 retracement of the leg up since March.
The strength indicator RSI has been showing divergence for quite some time, a sign of trend exhaustion. A correction is needed.
However, if Gold jumps back to close above 2,352, this likely bearish scenario would be negated, potentially reversing to an uptrend with a target of 2,400
Silver (XAGUSD) seems to be leading the way lower for Gold.
Similar to Gold, the RSI for Silver has also been warning about trend exhaustion for a few weeks.
The current sell-off has taken Silver down to the 0.618 retracement at 26.41, with potential to further decline to the 0.786 retracement and support at around 25.50.
A close above 27.75 will reverse this bearish move.