Gold Opens Up the 2014-Low; Silver Makes a Fresh Low

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Gold Opens Up the 2014-Low; Silver Makes a Fresh Low

Gold (XAU/USD)

Gold continues to be bearish since it retreated from the 1345.28 high in July. It has since broken below the cluster of 200-, 100-, and 50-day simple moving averages as well as a triangle support. This week, gold price (XAU/USD) accelerated downwards and broke the June support pivot at 1240.48. This opens up the 2014-low around 1183. The RSI dipped below 30 to show bearish momentum.

Gold (XAU/USD) Daily Chart 9/12
gold daily chart 9/12

(click to enlarge)

Assuming the maintenance of the bearish outlook, If there is a pullback, where should we expect sellers? In the daily chart, you can see a support/resistance pivot area in the 1270-1280 area. When we look at the 4H chart, we cam see that 1270-1280 is indeed recent support/resistance pivot. We can also see a falling trendline, and the 100-period SMA in the 4H chart in this area. We should also monitor the 4H RSI. If the market is still bearish, the 4H RSI should hold below 60.

Gold (XAU/USD) 4H Chart 9/12
gold 4h chart 9/12

(click to enlarge)

Silver (XAG/USD)

While gold opened up the 2014-low, silver is breaking below the 2014-low and making a new low on the year at 18.46 so far.

Silver (XAG/USD) Daily Chart
silver daily chart 9/12

(click to enlarge)

If price remains below a falling trendline that originated from the July high of 21.57, there is still further downside risk. We would have to go to a compressed weekly chart to see where we might find support for this downtrend with no reprieve.

Silver (XAG/USD) Weekly Chart (9/12)
silver weekly chart

(click to enlarge)

When we look at the weekly chart, we should first note the 2013 low at 18.20. Silver looks poised to test this low next week. Below that, we see a common support area just above 17.05. Below 17.00, the 2010 low at 14.63 should provide some support.

Note the bearish trend in the silver weekly chart based on the moving averages, and the RSI. This adds to the bearish scenario opening up as silver makes a fresh low on the year.

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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.