Gold Approaches the 2014 Low as Silver Eyes the 2010 Low

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Gold Approaches the 2014 Low as Silver Eyes the 2010 Low

With the market pricing in a rate hike by the FOMC by mid-2015, or possibly even earlier, the USD has been rallying across the board while commodities (priced in the USD) have been falling across the board, whether it be oil, dairy, and the precious metals gold and silver. Both gold and silver made new lows today, continuing their downtrend. Where will they go next?

Gold (XAU/USD) 9/30 4H Chart
gold09302014h4

(click to enlarge)

Gold was uncoiling earlier in the 9/30 session. After it broke below a recent consolidation low near 1206, it immediately popped back up. The 4H chart however shows us that the 50-period simple moving average (SMA) held again, maintaining the bearish outlook in gold.

For gold, the next key support will be the 2013-2014 lows just above the 1180 handle. A break above 1220 might put gold back into consolidation. Otherwise, the downtrend remains intact.

Silver (XAG/USD) 9/30 4H Chart
silver09302014h4

(click to enlarge)

As it has been the case lately, silver is leading gold in their bearish trends. Today, we can see that silver broke below the recent low at 17.31 much more cleanly and convincingly than the price action in gold. At this point, if we see a pullback, which is possible because the 4H RSI is oversold, we should anticipate resistance in the 17.30-17.50 area, which represents the lows of the previous 2-session consolidation.

Silver (XAG/USD) Weekly Chart
silver09302014wk

(click to enlarge)

When we look at the weekly chart, we can see that silver prices (XAG/USD) are at fresh lows on the year, and at lows not seen since 2010, as shown by the compressed weekly chart. The weekly chart also shows that the next key support could be the 2010 low at 14.64. We should probably expect some consolidation around this area, especially with the weekly RSI dipping into oversold territory.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.