Technical Update - Metals ripe for short-term correction

Technical Update - Metals ripe for short-term correction

Commodities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  Metals are ripe for a short-term correction before the medium-term uptrends are likely to resume.
Gold could dip below 1,800, Silver below 22 and Copper could test 400 before buyers are likely to regain control



Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

Copper
seems ripe for a short-term correction. A correction that could take Copper down to test 400 i.e., 0.382 of the January move.
However, Copper is in an uptrend both short- and medium-term and buyers are likely to come back in making the possible correction a minor and short one.
Daily RSI is showing positive sentiment with no divergence indicating Copper to move higher.

Copper has retraced more than 50% of the Q2-Q3 2022 downtrend (see weekly chart) and is now back above 55 weekly SMA. Bollinger bands are expanding and RSI is currently above 60 threshold. If RSI closes the week above 60 medium-term sentiment is positive and will indicate higher Copper prices in coming weeks and months.
0.618 retracement at around 431 could be reached early in Q1 but there is room up to resistance around 447-457 .

For Copper to reverse this bullish scenario a close below 370 is needed.

Source all charts and data: Saxo Group

 

Uptrend in Gold is short-term a bit stretched and the precious metal is ripe for a correction. Gold has broken the resistance at around 1,875 and could spike up above the 0.618 retracement of the Q2-Q3 2022 downtrend and above 1,900 before selling initiates a correction. A correction that could take gold down to 1,850-1,825. However, short-term intensified selling pressure could dip Gold down to 0.382 retracement of the past couple of months uptrend at around 1,783.
Daily RSI is still showing divergence and needs to close above the horizontal line to cancel that. If rejected the correction could be larger possibly down to test 1,800.

Medium-term trend is up however, supported by Bollinger bands expansion and RSI above 60. All Moving Averages are rising further underlining the medium-term bullish sentiment. A bullish sentiment that could take Gold to 1,970-2,000 going in to Q2.

 

Silver has step danced sideways out of the rising channel it was forming in November and December. A 0.382 correction down to 22 and a change is in the cards. RSI divergence supports this scenario.
However, if Silver breaks above 24.55 the uptrend is set to be extended.

Silver has almost reached its potential inverted S-H-S target and the above mentioned correction could test the Neckline from the upper side. However, there is room for higher silver levels with no strong resistance until 25,85-26. RSI is above 60 and no divergence supporting the bullish scenario.

Gold/Silver ratio is bouncing off strong support at around 74.57 and could move to resistance at around 82.20. A close above 82.20 and above 55 and 200 daily SMA’s is needed for further upside.
If Gold/Silver can break to close below 74 a sell-off down to 65-62 is likely.

 

RSI divergence explained: When an instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992