A snapshot of the daily chart status on the precious metals and their key ratio.
Gold continues to hold the small uptrend channel but will not get out of jail until it crosses and holds the SMA 50. It still has its nose poked out of the downtrend consolidation line, so that’s a positive. I don’t love RSI as it grinds its 20 day EMA. I also don’t care for the diminishing volume on this price advance. That would be characteristic of a bear flag.
Silver is also in a flag and we noted that it’s logical resistance area is where the SMA 50 meets long-term lateral resistance (not shown on the daily chart) beginning at 26. It’s a bear flag until it proves it can take and hold the SMA 50.
Both metals remain bullish beyond this short-term correction. As for their relationship, the Gold/Silver ratio (GSR) is logically doing pretty much what USD is doing. That is, flagging to consolidate the September run up. As with USD, break upward in GSR could come with market liquidity issues and a break back down by GSR & Uncle Buck could spring a new leg of inflation trades. For now, it’s in a handle that has not broken down.
