If I may be allowed, let me crow just a little bit about our technical analysis last month. In last month’s writeup, I said that the most likely scenario was for gold and silver prices to find support right around the price levels where they were at the time of that writing – with gold around $2,300 and silver in the $29-$30 range. And, believe it or not, that’s exactly what they did. Following a multi-day battle between bulls and bears around those price levels, gold and silver prices once again began marching to the upside. Prices haven’t exactly gone through the roof, but they are notably higher than those previously identified support levels. And, as far as I’m concerned, higher is better.

Now, that’s not to say that it’s impossible for prices to go lower – that’s never impossible – but, SO FAR, it appears that gold and silver prices have found significant price support levels, following the recent downside retracement.

(The Usual Note: I’m writing this analysis on approximately, give or take a day, Tuesday, July 16th, just to provide a point of reference. Obviously, any significant price movement occurring since that time should be taken into consideration as you conduct your own market analysis. The Usual Disclaimer: I’m not clairvoyant. I can’t see the future. Yes, I wish I did have that ability – that would certainly simplify life and considerably boost the balance in my brokerage account. But, alas, I don’t. Therefore, it is critically important that you conduct your own due diligence before making any investment decisions. After all, it’s your money, not mine, that you’re risking with any investment. Having said that, let me add that I always and ever wish the best for you in the financial markets.)

Without further ado, let’s take a look at the price action in gold and silver, as reflected on the daily, weekly, and monthly futures price charts.

Technical Analysis of Gold – Most Recent Price Action

All right, first up, let’s take a look at the daily gold chart and review – 

• The price action over the past month
• How the daily gold chart looks in relation to major technical indicators, such as the 20-day and 50-day moving average

(Yet another customary note: My technical analysis is done looking at futures charts. There is, of course, normally a slight difference between spot prices and the most nearby futures prices. If I notice a larger than usual price differential, I’ll let you know.)

The indicator showing on the daily chart below is the 20-day exponential moving average (red line). We can see that gold prices, after the big down day on June 7^th, spent about a month consolidating around the price range of approximately $2,300 to $2,350. On July 3^rd, the market enjoyed a big up day, with a strong close back above the 20-day EMA. Since then, gold’s price action has remained above the 20-day EMA, and, in fact, prices have moved steadily and significantly higher.

At the moment that I’m typing this, gold has just made a new intraday high above $2,454 that slightly eclipses the two previous high price points scored back on April 12^th and May 20^th. (Note: The previous high CLOSING price for gold was $2,438.50.) It will be interesting to see how the day’s trading closes, whether the price action forms a strongly bullish candlestick, or a bearish one resulting from price falling sharply back down, as it did following the new high recorded on April 12^th.

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It will also be interesting to see what tomorrow’s price action looks like. Both of the previous new record high days were immediately followed by a period of downside retracement that took the price of gold briefly below its 20-day moving average, and that lasted several weeks. If today’s action ends with a closing price above the two previous intraday highs, and then follows up by moving higher tomorrow, I would interpret that as an extremely bullish technical indication.

In any event, if we’re going to continue to view the 20-day EMA as a rough support level, which is currently around $2,380 and, as you can see, moving higher.

Okay, let’s reload the daily gold chart, this time with the 50-day EMA.

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Wow, definitely a strong day so far – in just the time it took me to write the previous paragraphs and reload the chart, the gold futures price has jumped from $2,452 to $2,461. In the words of the great Zen master, Lin-chi, “BOOM!”

Oh, I changed the color of the EMA to blue for showing the 50-day moving average.

Looking at all the year-to-date action, we can see that the 50-day EMA has thus far proved to be a significant support level. It’s only been briefly and slightly violated during gold’s upward march.

Taking a look at the MACD indicator, both the MACD signal line and the MACD histogram show positive crossovers to the upside occurring on Wednesday, July 3^rd. At the moment, the MACD appears pretty strongly bullish – moving steadily upward, but not appearing to be overextended or ripe for a turn to the downside. Note how this contrasts with the MACD readings when gold scored a new record high on April 12^th. Back then, the MACD signal line was definitely looking ripe for a downside correction, and the MACD histogram was actually showing a bearish divergence a few days before gold hit its high.

Long-term Technical Analysis of Gold

On the daily chart, the time span of price reviewed was year-to-date. The weekly chart shows the price action extending all the way back to September of 2019. I’ll stay with looking at the 50-period EMA (blue line).

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Wow, the gold futures price continues pushing higher – it’s now trading at $2,465.

As with the daily chart – perhaps even more strongly – the weekly chart reveals that the 50-week moving average has held up well as a price support level. The one notable exception to this is the period from June through October of 2022, when the price was driven well below the 50-week EMA and took several months to recover a foothold above it. Note, however, that when that upside price recovery did occur, price moved strongly upward for several weeks.

The gold price eventually topped out in May of 2023, back at its previous high around the $2,000 per ounce level. Since October of 2023, the price of gold has remained well above the 50-week EMA.

One interesting point that I note on the weekly chart is on the MACD. The MACD signal line appears relatively high, with a reading of 81.5, which might indicate a possible impending rollover to the downside. However, the MACD histogram has only just this past week crossed back from below to above the zero line. That would indicate both a bullish signal and a lot of bullish room left to run.

Gold – Monthly Chart

Finally, let’s take a look at the monthly gold chart. Since there are 12 months in a year, we’ll change the EMA we’re looking at to a 12-period EMA (still the blue line). This chart shows price action extending back as far as 2008.

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It’s clear that, looked at on a monthly basis, gold’s price action has tracked a 12-period EMA pretty closely over the entirety of this nearly 20-year time span. The current price action has taken gold about as far as its ever been above the 12-week EMA over that time period. That leaves us with basically two possibilities – 

1. Either gold will turn to the downside for a bit, returning closer to its 12-week moving average price, or…
2. Gold prices will move substantially higher – moving the 12-period EMA also substantially higher – before experiencing any significant downside retracement

As I’m watching gold futures rocketing higher – now with an intraday high of $2,470, more than $30 higher than the previous record high closing price – I can’t help but be a bit more inclined toward favoring the latter scenario.

However, looking at the MACD on the monthly chart does give me just a slight cautionary note. Both the MACD signal line and the MACD histogram are somewhat closer to the previous highest levels that they’ve hit over the time span we’re looking at. But then again, based on that previous action, they could still move substantially more to the upside. The MACD signal line is at 141 – back in 2011, it got as high as 174. Likewise, the MACD histogram reading is at 40.8 – it previously, back in 2020, got as high as 50.

Technical Analysis of Silver – Most Recent Price Action

Okay, let’s move on and see how silver is doing. The daily silver futures chart shown below is set up the same way as the daily gold chart was – showing the price action year-to-date in light of the 20-day exponential moving average.

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Well, interesting…unlike gold, silver is not only not scoring a new record high – it hasn’t even made it back up to its previous high of $32.75. However, currently trading at $31.44, it is, like gold, thus far enjoying a strong up day – opening at $30.93 and currently with an intraday high of $31.63.

The gold/silver price ratio is around 78.50, up a couple of points over the past couple of weeks, although still down significantly from where it opened the year at about 86.

The MACD on the daily chart appears overall pretty bullish to me. Both the MACD signal line and histogram are positive, yet neither one appears to be anywhere close to giving overbought indications. That would seem to indicate continued potential for silver prices moving higher.

The primary takeaway I have from looking at this chart is the fact that silver did manage to find support in the $29-$30 price range, and is now back well above its 20-day moving average. Since essentially staying above that 20-day EMA has been the pattern thus far all year, I would expect that pattern to continue for the foreseeable future.

And, in fact, I still look for silver to – at some point – explode higher and take out its all-time high of $50 per ounce. That’s based on simple, basic supply and demand. The current supply and demand picture for silver is that demand is outstripping supply at an ever-increasing rate year by year. I could be wrong, but I just don’t see how anyone can build a convincing fundamental scenario for lower silver prices. And if the price isn’t likely to go lower, well then, it’s likely to go higher.

The daily silver chart tracked with a 50-day EMA looks even a bit more bullish, as, for the most part, price action has remained well above that moving average throughout 2024. While the recent downside move got silver prices noticeably below the 20-day moving average – and managed to keep them there, off and on anyway, for a couple of weeks – it barely touched the 50-day moving average, and silver only traded under that 50-day EMA for a grand total of two days.

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Long-term Technical Analysis of Silver

The weekly silver futures chart, shown below with a 12-week EMA, shows that silver has pretty well been tracking that line – trading a bit above or below it – since late 2021. (That’s why I went with a 12-period EMA on the silver weekly chart, rather than using the 50-period EMA like I did when looking at gold’s weekly chart. Silver hasn’t been trading anywhere near its 50-week EMA since early this year – it’s currently trading around $31.50, with the 50-week EMA way back down around $26.50.)

A consistently bullish trend in silver is revealed starting in February of this year. Since then, silver prices have clearly moved substantially higher, taking out the key $30 resistance level, and price action has remained solidly above the 12-period exponential moving average.

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I’m having a difficult time getting a reliable indication from the MACD on the weekly chart. On the one hand, the MACD histogram is solidly in bullish territory, above the zero line, but not at an extraordinarily high reading. On the other hand, the MACD signal line does appear to be relatively extremely high, which could indicate a possible impending turn to the downside.

However, even if prices should take another downside turn, I think that the bears will have an even harder task trying to take out the $30 – formerly resistance, now support – level than they did when they attempted to push prices decidedly below it just a few weeks ago. And when you view that recent attempt to turn silver south on this weekly chart, it actually looks pretty pitiful, as it never even seriously threatened to take out the 12-period EMA.

Therefore, barring some significant shift in the market, I’d look for that 12-week EMA to continue to hold up as a support line for price. And it’s an EMA that’s moving strongly higher. In just the past four weeks, it’s moved up from around $28.80 to around $29.90. So, that’s reinforcing the notion that the $30 price level has been flipped from being resistance to being support.

Silver – Monthly Chart

The monthly chart picture of silver, extending back over the time span since March of 2013 – shown below, sticking with a 12-period moving average - looks like encouraging news for bulls all the way around. Price action is well above the 12-month EMA, and the last five months show four strongly bullish moves up and only one month with a slight decline, from $30.62 to $29.56 – followed by the current month, where the price of silver is currently about $2 higher, at $31.45.

In addition, both the MACD histogram and signal line on the monthly chart indicate strong bullish momentum.

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Technical Analysis of Gold and Silver Prices – July, 2024 – Conclusion

Overall, the current technical picture for gold and silver prices looks decidedly bullish to me.

Let me also reiterate my note from last month that, seasonally, precious metals prices have tended to bottom out in June and then trend higher into September, before taking a slight dip prior to finishing the year strongly.

So, where is the price of gold headed from here? Hard to say. With gold making YET ANOTHER NEW RECORD HIGH, we’re in uncharted waters. Since the price of gold has never been this high previously, there are no technical analysis support or resistance reference price points from price action in previous years to look at. $2,500 is, obviously, the next upside target price, but gold could certainly go much higher than that. Plenty of precious metals market analysts are forecasting future gold prices of $3,000, $5,000, or even $10,000…or higher. Some have noted that, if there were a return to the gold standard, where the US money supply was required by law to be at least 40% backed by gold, then – given the current money supply and the amount of US gold reserves – the price of gold would have to rise as high as $25,000-$30,000 an ounce to meet that equation!

I will note this: Whenever any financial asset – a commodity such as gold, or a stock – makes a new, all-time high, the price typically advances significantly higher. In other words, it doesn’t usually happen that an asset makes a new record high by just a small amount and then doesn’t go any higher. That’s not the norm. The norm is that once an asset clears into “open field running” territory – that is, where there are no previous price points in the asset’s trading history that can be expected to act as price resistance levels, then the asset typically enjoys a period of unbridled advancing to the upside.

But, for the moment, for the immediate future, we’ll say that gold may encounter some significant resistance around the $2,500 level. But even if it should do that and then see some retracement to the downside, well, would it really be likely to suffer a substantial decline? – After all, it just evidenced pretty strong support around the $2,300 an ounce level. Given that fact, and then seeing it break very strongly above its previous high around $2,450 – if it were then to continue advancing to the $2,500 level, I would have a hard time envisioning it even falling back as far as $2,300. I’d venture a guess that it would more likely catch support after just a small decline, say somewhere in the $2,400 to $2,450 range.

So, for now I’ll go with - 

Gold
Nearby support level - $2,400-$2,425
Next resistance level - $2,500

What about silver? Well, silver is lagging somewhat behind gold in that, unlike gold, it hasn’t yet taken out its most recent high. But if gold continues its surge to the upside, it’s more than likely going to pull silver along with it. At some point, you might see a sort of slingshot effect, where the imaginary line from gold pulling silver higher gets stretched taut and then snaps upward, shooting silver past gold in terms of its percentage price increase. Silver’s 20-day EMA is up to around $30.50. Therefore, I’m going to peg short-term support for silver in that $30.00 to $30.50 range (that’s based on the fact that recent downturns have managed to drive prices temporarily below the 20-day moving average), and say that its next nearby upside targets are its recent high of $32.75, and then $35. (The real upside price target that investors are eyeing for silver is still its all-time high of $50 an ounce.)

Silver
Nearby support level - $30.00-$30.50
Next resistance levels - $32.75 (recent high), then $35

So, as of Tuesday, July 16, 2024, that’s a wrap. Technical analysis wise, a pretty picture for gold and silver bulls – looking like a rather bleak future in store for short selling bears. As I interpret the current chart picture, the most likely near-term scenario looks to be higher prices for gold and silver.

In closing, I want to express a note of thanks to our friends at TradingView.com for their excellent charting services, which make my job easier (and, of course, I’m totally in favor of that).

• J.B. Maverick

P.S. Wednesday morning note: In New York session trading so far this morning, gold is down ever so slightly (a whopping 0.21%). A bit of a retrace there is no surprise, given the huge move up yesterday – it’s still trading nearly $30 above its best previous closing high prior to yesterday. But silver is down 3%, back down into my identified support range. While I’m no more omniscient than I am clairvoyant, what this looks like to me is the work of those nefarious characters who try to artificially depress precious metals prices by short selling massive amounts of futures contracts.

It’s easier for them to trade huge numbers of silver futures contracts, since silver is so much less expensive than gold – which translates to much lower margin requirements on silver futures contracts. (Plus, I think the bull market in gold has just gotten away from them – that any efforts to knock it down are increasingly resulting in large losses for short sellers.) That’s my take anyway. If that is, indeed, the case, then, at the moment, their attempt to drag the whole precious metals complex lower by slamming silver doesn’t appear to be working – as gold, platinum, and palladium are all down by only less than 1% on the day. If my analysis on this is correct, then the likely scenario is that silver will catch support and then move back to the upside, more in line with the current price action in gold. I just have a really hard time envisioning silver going down significantly, taking a seriously bearish turn, while gold is all but blowing the roof off.

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Sources:

https://www.tradingview.com/

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