XAU/USD sees breakout as XAG/USD struggles
Gold, XAU/USD, Silver, XAG/USD – Technical forecast for the coming week:
- Gold prices aimed higher last week but gains retreated on Friday
- When watching XAU/USD, keep a close eye on the trend line
- XAG/USD looks relatively neutral until a major breakout is seen
Technical forecast for gold – slightly bullish
Gold prices have been edging higher for the past week but pared Friday’s losses very sharply US jobs report brought the tightening of the Federal Reserve back into the limelight. From a purely technical perspective, the yellow metal managed to hold a close above a key falling trendline from March. However, there has been a lack of upward movement. Further gains would shift the outlook increasingly bullish.
A return below the trendline would likely be a short-term bearish sign, putting focus on the broader downtrend since earlier this year. In this case, clearing the immediate support at 1753 would open the door for a revisit of the July low at 1681. Resuming the broader downtrend means breaking below that point, exposing the 2021 low at 1676 and beyond.
On the other hand, the extension of the short-term uptrend puts the focus on the immediate resistance at 1803, which is the 61.8% Fibonacci retracement. Additionally, the 100-day simple moving average (SMA) would come into focus. That could keep the broader downside focus. Otherwise, a subsequent clearing of the line would open the door for a revisit of the June high at 1879.
XAU/USD daily chart
Silver Technical Prognosis – Neutral
In contrast to gold, the price of silver has cautiously aimed lower over the past week. Additionally, a closer look shows that the precious metal failed to advance above the 20.32 – 20.62 reversal zone. Therefore, the technical picture appears neutral for the coming week. Broadly speaking, XAG/USD remains in a downtrend since prices peaked in February.
The 50-day SMA also held as resistance for the past week, maintaining the downtrend. A break above this line as well as the reversal zone would shift the outlook increasingly bullish. Such a result puts the focus on the 23.6% Fibonacci extension at 20.98. Additionally, the 100-day SMA could set in as resistance.
In case of a downside reversal, midpoint of extension at 19.27 looks like immediate support. Additionally, the July lows will come in and form a key zone between 18:14 and 18:41. The outlook would likely remain neutral until a break below this range is achieved. That would reveal the 78.6% extension at 17.41.
XAG/USD daily chart
–— Written by Daniel Dubrovsky, strategist for DailyFX.com
To contact Daniel use the comments section below or @ddubrovskyFX on twitter