The overall controlling trend at the moment is an uptrend. It’s a bull run for the precious metals (and, hey, copper isn’t doing bad either – up about 30% year-to-date), but, of course, there are ebbs and flows in any long-term trend. So, let’s see if we can identify some current probable support and resistance price levels.

(Note: I’m writing this on the morning of May 15^th, just to give you a point of reference for my analysis. Obviously, any significant price movement that has occurred since that time should be taken into consideration as you’re doing your own market analysis. Disclaimer: I’m not clairvoyant, do not have the ability to unerringly predict the future. Too bad, right? - It would be really helpful to us if I was. Anyway, you should always do your own due diligence, perform your own market analysis, and make your own trading decisions. After all, it’s your money that you’re trading with.)

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Technical Analysis of Gold – Recent Price Action

Looking at the daily gold futures chart below, which covers price action over about the last four months, I think one noteworthy observation is that the most recent downside correction found clear support at the 20 EMA (the blue line on the chart). I think it’s particularly significant that, on the day the pullback bottomed out, there was clear rejection of prices below the 20 EMA. That’s shown by the long tail on the bottom of the candlestick that reflects the price action on May 3^rd. Bears obviously pushed hard to the downside but the market ultimately closed just atop that 20 EMA line. They couldn’t hold the price down, so – instead of a big down candle with a close that violated the 20 EMA – we ended up with virtually a bullish hammer up candle. And, sure enough, price seems to have resumed the overall uptrend from there.

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So, what practical use can we make of this information? I’d say that, until if and when the 20 EMA does get violated, we can look for it to continue to serve as support in any future downside corrections – a price level where traders may wish to buy, initiating or adding to long positions.

By the way, price action is now right on the verge of filling the gap left by the first big down day of the pullback. Looking at that action, there are two obvious possibilities – 

1. The market once again encounters significant resistance around the $2,400 level, and again turns to the downside
2. The market makes new highs above $2,400 and continues higher (the next logical resistance level is likely at $2,500)

I would venture a guess that, given the gold market’s overall bullish trend since the first of the year, #2 there is somewhat the more probable scenario. If you’re just playing the odds, then, barring a significant shift in price action, betting bullish is the safer bet.

Also note the action on the MACD indicator displayed below the chart. Both the MACD signal line and the MACD histogram are poised right on the edge of turning back from bearish signals to bullish signals. As long as they do that, I’d interpret that as a strongly bullish indication, since price has already moved substantially higher – more than $50 up – from the pullback low even while the MACD remained somewhat bearish. Therefore, if the MACD completes its turn back to the upside, that would indicate substantial momentum for continuing upside price movement.

By the way, just FYI, the 50 EMA is way back down around $2,275, so, any traders who might be waiting for a pullback to the 50-day moving average to buy in might be waiting for a long time.

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Technical Analysis of Gold – Long-term

A look at the weekly chart of gold shows a long-term uptrend that has been in place since October of 2023. The weekly chart shows that gold has been moving steadily and sharply higher since mid-February. Price action has managed to remain safely above the 10-week EMA (the blue line on the chart). While the MACD histogram has rolled over to the downside a bit – although it’s still well above the zero line, the MACD signal line is still strongly bullish.

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The weekly 20 EMA is down around $2,225, and the 50 and 100 weekly EMAs are waaaay back down around the $2,000 an ounce level. Should the market experience a significant downside correction on the more long-term trend, a pullback to the 20 EMA would represent approximately a 50% downside retracement between current price levels and the 50 and 100 EMA price levels. However, unless I see some substantially different price action, I’m not expecting to see a move that big to the downside.

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Technical Analysis of Silver – Recent Price Action

Even as I’m typing these words, silver futures prices are exploding to the upside on high volume trading – so far, up almost $1.00 for the day, trading around $29.50. The $30 price level is looking more and more like a delicious meal being eyed by a hungry silver market. Silver bulls can almost taste it. They want to get price solidly above $30, and then start working on getting to $35 (…and then $50, $100, and, who knows?).

The price action in silver looks even more impressive than gold’s impressive price action. Although the recent downside pullback did briefly (for 3 days, to be exact) violate the 20-day EMA, silver futures prices have, for the most part, stayed safely well above the 20 EMA since the end of February. Plus, outperforming gold, silver has not only recovered the losses incurred during the recent pullback – it’s already scored new highs above the previous high close of $28.77.

I also want to mention that the gold/silver price ratio has dropped below 81, hitting its lowest level since November, 2023. That also puts it quite close to taking out the lows of the previous 12 months, which are around 78.50. A downtrend in the gold/silver ratio has been predicted by many precious metals market analysts, myself included, for some time. I could be wrong, but it looks to me like such a downtrend is now firmly in place. Therefore, I expect the ratio to continue falling, which would be a strong positive note for silver bulls.

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I noted in reference to the daily gold futures chart that the MACD histogram and signal line were both poised right on the brink of turning back to bullish from bearish. The MACD for silver prices reflects even stronger price momentum for silver, as both of the MACD indicators on its daily chart have already turned positive, with the signal line completing an upside crossover and the MACD histogram crossing back above the zero line.

(The price action in silver? - I love it – ‘cause I love silver as an investment right now. The only thing I don’t like about silver at the moment is the fact that I don’t own MORE of it. Do you think my broker would let me go back and load up on some more around the $20 an ounce level? Come on – it’s not like I’m being greedy and saying let me buy it at 10 bucks an ounce.)

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Technical Analysis of Silver – Long-term

The weekly silver futures chart shows its price action tracking pretty steadily along the 10-week EMA ever since it crossed above the 10 EMA back on March 4^th. The MACD histogram looks solidly bullish – well above the zero line, and having just clicked back to “moving up” from “moving down”. As with the weekly chart for gold, the MACD signal line is all but through the roof. The clear indication from this is strong, sustained momentum in the overall long-term uptrend.

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The weekly 20 EMA for silver is at $26.00, and the 50 and 100 EMAs are at $24.70 and $24.20, respectively. Bears were pretty much able to keep the price of silver futures under $25 for about a year, since May of 2023. But, looking at the way that silver has roared higher since it broke through that price level the first week in April, I don’t think they’re going to be able to push it back down below $25 an ounce anytime soon – maybe not anytime in our lifetime. I think $26.50-$27.00 is pretty much the floor at this point, and I wouldn’t be surprised if we don’t even see silver dip significantly below $28 from here on out.

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Technical Analysis of Gold and Silver – May, 2024 - Summary

The daily and weekly charts for gold and silver are both showing a firm uptrend still in place. If bears are seeing anything encouraging, I don’t know what they’re looking at. And I imagine that most bulls are seeing any downside retracements in price as just an opportunity to buy more gold or silver at advantageous prices.

Gold
Support: $2,300
Resistance: $2,500

Silver
Support: $28.00/$27.00
Resistance: $30.00

Bears obviously want to knock gold back down to around $2,200 and silver back down to $25-$26 (I say, “Yeah - Good luck!”, on that last one). Should the uptrend in gold and silver stall out around current price levels, you could see gold possibly retrace to around $2,300 and silver to around $27 to $28. On the flip side, bulls want to push gold above the $2,500 level and silver above the $30 level, and start turning those into support, rather than resistance, price levels.

Gold may well hit some sizeable resistance about $100 higher from here, around the $2,500 level. There’s not, however, any real reason for that other than $2,500 being halfway between $2,000 and $3,000. Gold is in previously uncharted territory, so there’s not really any specific price level that you can point to as being recognized resistance.

Silver is likely to encounter at least some resistance around $30, if for no other reason than the fact that it’s a round $10 price number. However, I don’t know, but at this point, I’m inclined to believe that silver bulls can blow through that $30 level. Silver is just showing a lot of upside momentum, so I think it’s a bit tough to make a case that it’s just suddenly going to die here. If bulls can convincingly cross the market above $30, then it’s entirely possible that you might see a significant short squeeze that could quickly jump the price of silver substantially higher – maybe to $32-$33. It might then come back and test the $30 level as a support line before beginning to mount a serious assault on the $35 price level.

All in all, at the moment, the long side of the precious metals market looks to be the profitable side.

• J.B. Maverick

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Sources:

https://www.tradingview.com/

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