I wrote “progress” in the title because the short-term correction in gold and silver is ongoing but also has not compromised the technical standing of either of metal. The pullback has however, come roughly to the limit points by which they remain normal as opposed to turning abnormal.
Gold would have us believe it is doing a similar post-FOMC head fake and failure as last time (red shaded). Notice how today’s candle is testing the SMA 50 and the broken trend line. That is completely normal. Lose the SMA 50 and that trend line and it would get uncomfortable and while the short-term rally would not be broken, it would not be normal either.
My sense is that gold is getting caught up in the dirty areas of geopolitics and social uproar and the relief therefrom (I just made up that word thinking it must not be a real word, but it turns out it is :-)). Gold is about what the Fed is doing to the funny munny. People knee jerking gold, guns and ammo are inflicting short-term ripples into the price.
Look at RSI and MACD. At this moment both are good, with RSI resetting to its EMA 20 and MACD positive and not triggered down. Anything can happen, but this morning’s $25 drop has not compromised the rally potential at this moment in pre-US open. Finally, the SMA 200 is firmly trending up and the SMA 50 has the potential to turn back up. This test will be important.
Silver is also still on script to its short-term rally. The thick resistance zone of 26-27.50 always was going to provide just that, resistance. Silver ticked above the top end of it and has pulled back a bit. I would prefer to see this morning’s low of 26.09 hold but it can drop to test the SMA 50 (24.85) where there is more support. That would be less comfortable, but it would not break the technicals.
As with gold, RSI is doing its job in resetting to its EMA 20 and MACD is okay. If RSI loses its moving average and MACD triggers down it would not be normal to a nice, manageable rally.
The SMA 50 is biased up and the SMA 200 is firmly trending up.
Bottom Line: Both metals are and have been biased bullish and so it is the bear case that would have to prove otherwise while we are looking to confirm the bull case with these tests.
