Technical Analyst, Saxo Bank
Summary: Gold forming rising wedge pattern. A correction down to 1,770 is in the cards
Silver in steep rising channel. Correction should be expected before bull trend is likely to resume
Gold/Silver ratio testing key support. Will it bounce or break below to test 2022 lows?
Gold XAUUSD
After hovering around 1,800 for a couple of weeks Gold has moved higher and finally seems to have taken off from the resistance at 1,808. However, there precious metal has formed what could be a rising wedge like pattern and with continued divergence on RSI a correction is in the cards.
A correction that could be limited however, possibly down to test the 200 daily SMA around 1,770. The 200 daily SMA is declining but 55 SMA is rising sharply. A spike down to 1,750 and the 55 SMA should not be ruled out before Gold is likely to resume uptrend.
If Gold closes above its upper rising trend line the pattern is busted and RSI is likely to trade out the Divergence thereby indicating higher levels.
At the time of writing weekly RSI is above 60 threshold. If it closes the week above 60 RSI will be showing positive sentiment with likely higher gold prices to follow. A move to the 0.618 retracement just below 1,900 seems likely but there is room up to previous highs with resistance at around 1,972-1,988.
Weekly Bollinger Bands are expanding supporting the bullish view.
If Gold collapses and closes below 1,722 the bullish picture both short- and medium-term is demolished and likely reversed.
You can follow this pattern in the Trade Signals module on SaxoTrader. The pattern is still Emerging but will change to Breakout if Gold breaks below its lower rising trendline.
Silver XAGUSD
Silver is continuing higher in its rising channel formation. There is divergence on RSI indicating a looming correction. If Silver breaks below its lower rising trendline a correction down to around 22.50-22.30 could be seen.
However, the medium-term outlook would still be bullish. Silver is moving towards its Inverted Shoulder-Head-Shoulder target – illustrated by the two vertical arrows, but there is room up to around 25.85-26 before there is overhead resistance.
RSI above 60 supports the bullish outlook.
XAUXAG Gold/Silver ratio is trading around the 0.618 retracement and support around 74.57. A close below is likely to send XAUXAG down below 70. A collapse down to around 65 is not unlikely.
Weekly RSI is below 40 threshold indicating Gold/Silver will move lower over the next few weeks. However, a short-term bounce to 80-82 could be seen
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.