Gold and Silver Approaching Key Long-term Levels

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Gold and Silver Approaching Key Long-term Levels

Gold and silver priced in USD both fell after Friday’s highly anticipated US jobs report. The US NFP data reported 248K jobs added in September, while the unemployment rate fell to 5.9%, the lowest in 6 year. This boosted the USD and naturally pulled down anything priced in the USD.

Gold  (XAU/USD) Daily Chart 10/6
gold daily chart 10/6

(click to enlarge)

As we begin a new week, we see price dipping further below an already sharply bearish daily candle. The 1180.20 level is the 2013-2014 low. As the daily RSI pushes into oversold territory, we should expect at least some near-term consolidation. However, the upside should be limited to 1220. A break above 1240 could be a sign of bullish correction.

Otherwise, the bearish outlook remains, and has room to run, IF gold price breaks below 1180.

Gold XAU/USD Weekly Chart
gold weekly chart 10/6

(click to enlarge)

We can see from the weekly chart that the market has been consolidating since mid-2013, and the prevailing trend was bearish, from the 2011, and historic high of 1920.74. A break below 1180 therefore continues a downtrend, and gold will have the 2010-low of 1043.90 in sight.

Silver (XAG/USD) Daily Chart 10/6
silver daily chart 10/6

(click to enlarge)

The pace of decline in silver price has been faster than that of gold. We can say that silver has been leading the two precious metals in its bearish mode. Price fell further on Friday as gold did, but silver has already broken into fresh lows on the year with no signs of stopping. At this point, if we get a pullback, we should see sellers around 18.00. Above that, silver might be in a meaningful consolidation or bullish correction.

Silver (XAG/USD) Weekly Chart
silver weekly chart 10/6

(click to enlarge)

Now to the downside, since it has broken into fresh lows on the year, the next support factor would be the 2010-low at 14.63 as seen in the weekly chart. We can also expect this bearish continuation scenario because price has been bearish since 2011, and broke the 2013 and 2014 consolidation.

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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.