Gold and silver futures are firm in pre-market. Let’s update the technical situation using daily charts.
Gold, which we have consistently noted to be in the Handle of a bullish long-term Cup pattern since the correction began 1.5 years ago, is making progress above the moving averages with resistance upcoming at 1830 +/-. Bullish objectives are to clear the November high above 1880 and then be set free above the ‘gateway’ high of 1920.
Holiday volume is not inspiring but we should also factor the now-positive seasonal and the very fact that it has been 1.5 years in correction. Gold has the potential to change its daily trends up as you can see by the flattened and crossed SMA 50 and 200.
A closer view.
Silver is interesting in that it made a potential (please respect that word) double bottom just above the 50% Fib retrace of the previous and massive rally out of the 2020 crash. It has also done its 1.5 year time in a correctional facility and with spirits suitably dampened and the seasonal aspect coming in line, I am going to keep a completely open mind on it. As yet however, it’s still a correction and a daily downtrend.
It has now bounced to the SMA 50, which is resistance with more short-term resistance at the down-turning SMA 200. On the upside, silver needs to take out 29 and then 30.35 to become prospective for a try at the old high near 50.
First things first, however. Let’s see it clear 23.51, 23.75 and 24.90 before getting too excited.
Gold lays in wait for the end of the functional inflation trades or a more economically destructive inflation problem (Stagflation).
You would think silver would have been firm, considering its inflationary bias. But it’s not happening yet. This is probably due to the levels of impulsiveness it has needed to work off in this correction. I mean, look at the vertical explosion during the 2020 crash recovery on the first silver chart above. Silver is now acting as if it is afraid of the Fed whereas back then it gave the Fed the finger.
I do not have as good a technical nor fundamental read on silver as (I think) I have on gold. It’s sloppy and it is not as fundamentally consistent as gold (as it cross dresses between cyclical commodity and counter-cyclical monetary) and its chart is sloppier.
So be it. One thing we can say is that 1.5 years in the hole is a good, long sentiment cleaning. Another thing is that the seasonal aspect is in line. Finally, gold is rallying until such time as it would be stopped at one of the resistance milestones. Since I think I am seeing the spin on that ball better than the silver one, I’ll let gold guide and so far it is still constructive.