A quick daily chart snapshot of gold and silver, along with the Gold/Silver ratio in pre-market (US).
Gold (CFDs) is rising toward clear lateral resistance at 1890 to 1900. There resides the downtrending SMA 50 to add more importance to the resistance area. The downtrend channel is obviously intact and the bullish objective for gold would be to take out resistance/SMA 50, break the channel and then take out the SMA 200 (1929) and start making higher highs to August and September highs. As it stands now, it’s an oversold bounce.
Silver is more dramatic, as usual. It has bounced right to the clear resistance point at the EMA 20 (22.20) that you, I and everyone else sees. While silver could fail here I would not be surprised if it were to smash resistance and try for the moving averages, to get ’em (silver bugs) really bulled up. The chart shows the moving average traffic and the 9/22 high of 23.77 as the ‘get out of jail’ objectives.
The Gold/Silver ratio has eased as the gold stock sector along with many other markets have bounced. This was anticipated; a brief broad relief bounce, at least. But now that we’re getting the pullback in the ratio the important focus is on what comes next and this chart will sure help indicate that. It can ease a bit further on this pullback, but if it were a stock chart the moving average convergence (support) would be the buy zone.
Bottom Line
Gold has bounced to near its first clear resistance area. Silver has bounced to its first clear resistance. They have room to bounce further, even in consideration of the intact downtrends.
If the Gold/Silver ratio breaks down (silver rises better than gold), it would aid the precious metals and many other markets in the near-term.
If the Gold/Silver ratio breaks upward again, likely dragging the USD along with it, it could terminate the precious metals rally as well as many other markets. Especially inflation sensitive markets.
