Gold Futures – Technical Update
Gold futures weakened last week and based on our technical analysis on the short term 4-hour charts, Gold futures respected the rising wedge chart pattern and declined to reach the targets of 1157. The major risk for Gold futures was last weekend’s Swiss Gold referendum, which the Swiss voters had rejected. The markets were expecting to see this as bearish for Gold, which for a moment it was as Gold decline earlier on Monday, only to reverse their losses and close the day higher of about 2%. While there is no logical reason as to why Gold futures rallied (and the Swiss Franc saw a sell off), one of the factors was attributed to the US Dollar’s weakness earlier this week. However, with the Greenback managing to push ahead again with most of the currencies falling against the Dollar, Gold futures managed to hold their ground.
The weekly charts for Gold shows that after last week’s decline, this week looks set to post solid gains in the precious metal. Of course, the key risk being the US jobs report due today, which could potentially swing the precious metal in either direction. We do note that the larger trend continues to remain bearish and any potential moves in Gold to the upside are to be viewed more as a counter trend move.
When looking to the H4 charts, we notice another chart pattern, the bullish pennant pattern being formed after the sharp rally seen earlier this week. Price has been consolidating into a tight congestion zone. An interesting point to mention being that the bottom end of the pennant is sitting right near the support levels that were established while we notice the upside rallies likely to meet resistance near the falling price channel.
Nonetheless, the bullish pennant gives an upside target towards 1270 levels, which is a broken support level as mentioned from the weekly charts time frame. A retest to this level will and a successful test at that could see Gold futures potentially resume the major bearish downtrend. Alternatively, a failure of the pennant near any of the resistance levels from the H4 charts could be indicative of a very bearish momentum building up in the precious metal.
Gold Pivot Levels
| R3 | R2 | R1 | Pivot | S1 | S2 | S3 | |
| Weekly | 1231.68 | 1218.03 | 1192.69 | 1179.04 | 1153.7 | 1140.05 | 1114.71 |
| Daily | 1224.08 | 1218.77 | 1212.08 | 1206.77 | 1200.08 | 1194.77 | 1188.08 |
Silver Futures – Technical Update
Silver futures made a brief dip down to $14.59 support level but promptly pushed higher. After the small bodied doji candle two weeks ago, current week’s price action at the time of writing is looking to be quite bullish. If we see a weekly close above 16.72, we could potentially expect to see a rally to 17.83 levels. Failure to close above 16.72 however would keep the current bearish view intact.
The daily charts for Silver futures show the bearish flag pattern in play. However, we notice an increase risk to this pattern as price action managed to break above the falling support line and even a break of the trend line briefly saw prices stall and reverse near the previous reversal zone of 15.33. This is indicative that we could potentially see Silver move as high as 16.82 or possibly even 17.15 levels, which are two major resistance levels. Failure to break above these levels will then see the trend line acting as support, and only a break of the trend line will confirm a move lower.
Silver Pivot Levels
| R3 | R2 | R1 | Pivot | S1 | S2 | S3 | |
| Weekly | 17.61 | 17.17 | 16.31 | 15.87 | 15.01 | 14.57 | 13.71 |
| Daily | 16.92 | 16.8 | 16.63 | 16.5 | 16.34 | 16.21 | 16.04 |
