Gold and Silver Technical Analysis – Week of Oct. 20

Gold and silver look promising for more upside.

Bullion.Directory precious metals analysis 20 October, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

We have seen the S&P 500 jump higher into the weekend on comments that the European Central Bank (ECB) could buy assets as soon as next week (because it has worked so well in the US and Japan?). Although equities were higher by double-digits, gold and silver were only modestly lower. This morning futures are heading lower part on profit taking, part on uncertainty.

Last week, gold broke higher through a strong descending channel. This move is promising. Currently, price action has been held underneath key resistance of $1,248/50 per troy ounce, corresponding with the 50-day exponential moving average (EMA). A close above these levels will signal a further leg higher, targeting a supply zone between the 72-day EMA and the descending trend creating in late July at $1,257.4 per troy ounce.

However, the 20-day EMA will be the first likely support level on a price breakdown near $1,229, while secondary support is found at $1,220.60.

Silver prices have been lingering in the mid-range of $17 and some cents per troy ounce. Since bottoming, the price action is grinding higher withing an ascending channel with both RSI and +DMI trending upwards. Resistance looks to be strong at $17.78, which corresponding to the 26.8 percent Fibonnaci retracement of July’s high of $21.495.

This area will be the nearest target, while a close above this level would push prices to channel resistance at $18. Support will lay at within the channel, but a break lower could send prices to $17 per troy ounce.

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