Silver and gold technical outlook turns bullish after U.S., EU yields pull back - 25/08/2023

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Silver’s recent strength could be just the beginning, and the technical picture has turned bullish for both the gray metal and gold, according to analysts at ActionForex.

The analysts noted an intensification of silver’s impressive recent rally Wednesday and said it pulled gold higher in its wake. “This surge seems to be a direct response to the retracement of benchmark treasury yields in both the US and Europe, which were affected by less-than-stellar PMI figures,” they said. “Market sentiment is now swaying towards the belief that major central banks might be quickly approaching the finale of their tightening cycle.”

While everyone is focused on Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole Symposium on Friday, the analysts said that market participants should also keep an eye on “insights and comments from other prominent central bankers,” which could also impact price direction.

“Technically, Silver’s strong break of 55 D EMA [55-day exponential moving average] affirms the case that consolidation pattern from 26.12 has completed with three waves to 22.21,” they wrote. “Further rise is now expected as long as this 55 D EMA (now at 23.56) holds, to 25.25 resistance first. Decisive break there should confirm this bullish case and should also resume whole up trend from 17.54 (2022 low). Next target would be 100% projection of 17.54 to 24.62 from 19.88 at 26.96.”

Turning to gold prices, the analysts said that “a short-term bottom is in place at 1884.83, with D MACD crossed above the signal line.”

They said a further rebound is now in play to the 55 D EMA, currently at $1932.52. “Sustained break there will argue that whole corrective pattern from 2062.95 has completed with three waves down to 1884.83, after defending 38.2% retracement of 1614.60 to 2062.95 at 1891.68,” they said. “Stronger rally would then be seen to 1987.22 resistance to confirm this bullish scenario.”

After rallying over 4% yesterday and trading as high as $24.283 this afternoon, silver prices have pulled back slightly, with spot silver last trading at $24.100.

Meanwhile, gold had its own intra-day mini-rally following the surprisingly weak durable goods report this morning. It hit a high of $1922.73 just before 11 a.m. EDT before retracing its gains throughout the afternoon. Spot gold last traded at $1916.81, and is nearly flat on the session.