Technical Outlook for Gold and Silver: Range-best

Gold, XAU/USD, Silver, XAG/USD – Technical Outlook:

• Gold is hovering around the key 1675-1685 support.
• Silver has retreated from key resistance.
• What is the outlook and what are the key levels to watch?

GOLD SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

Gold’s inability to extend gains this month and pullback from hard resistance are a sign that the yellow metal is not out of the woods. At the same time, the downside appears to have been cushioned for now, suggesting that a range is developing in the near-term.

XAU/USD daily chart

Chart created with TradingView

XAU/USD has pulled away from a key converging resistance: the 1735 mid-September high, which coincides with the 89-day moving average and the top of an April bearish channel (see chart). Gold is now holding above the support at the midpoint of the channel and may range from 1610 to 1750 in the near term.

XAU/USD weekly chart

Chart created with TradingView

Nevertheless, the bias towards gold remains low overall. On the weekly chart, gold has been flirting with crucial support at a 2021 horizontal trendline at around 1675-1685, which is somewhat unsurprising given the importance of the support – a potential major double-top formation (the 2020 highs and 2022). . The target price would indicate significant weakness over the coming weeks and months if the pattern were triggered.

SILVER SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

Silver’s failure to break key resistance earlier this month shows that the precious metal remains range bound at best for now.

XAG/USD retreated from near hard resistance at 20.85 August high, slightly below resistance on a late 2020 horizontal trendline around 21.50. Additionally, despite the strong intraweek rally in early October, the momentum on the weekly charts was little. In fact, the 14-week Relative Strength Index (RSI) has remained below 50 since the downtrend stalled near a fairly strong converging support area in July: the lower edge of a falling channel of 18.13, marked with coincides with a horizontal trend line of 18.70 (see chart ).

XAG/USD weekly chart

Chart created with TradingView

Furthermore, momentum’s inability to rise meaningfully is also a sign of a bear market rally. Typically, the RSI tends to be limited below 50-60 on such corrective rebounds.

While the broader downtrend remains intact, the sideways movement in silver prices could continue in the near term. XAG/USD needs to break below support at 17.50 September low to resume downtrend. That could pave the way towards 15.50 (the 78.6% retracement of the 2020-2021 rally). On the upside, silver needs to break at least 20.85-21.50 resistance for medium-term downside pressure to ease.

— Written by Manish Jaradi, Strategist for DailyFX.com