Gold fell again on Monday as traders shifted capital back into equities and other risk assets. This time last week, gold hit an all-time high of $4,381, despite looking very overbought according to its daily MACD. But prices dropped sharply after that, and by Wednesday morning, it was closing in on $4,400 to register an overall high-to-low decline of close to 9%.
It then bounced but ran out of puff as it approached $4,150. It looks as if this has become gold’s first upside resistance target. Prices need to break and hold above here to signal that further gains are possible.
Meanwhile, the daily MACD has pulled back. While it is no longer seriously overbought, it currently indicates that downside momentum has picked up. Gold’s first line of support comes in around $4,000. Fundamentally, all the positive news around the US-China trade rapprochement has lessened gold’s haven appeal – for now. But that’s not to say that gold won’t find a floor at some stage, and that may persuade traders to come back in on the buy side.
Source: TN Trader
It has been a similar story for silver. Less than a fortnight ago, it hit a fresh all-time high of $54.60. It too was extremely overbought, and the price action since then has seen prices pull back 13% to lows hit overnight. That is the main difference between gold and silver during this sell-off. While gold managed to rally off its lows, silver’s bounces have proved short-lived, with this morning’s sell off taking prices down to near-three-week lows.
The daily MACD has certainly pulled back from overbought territory. But as things stand, there’s nothing to suggest that silver can’t fall further. In the short-term, it is overdue for a bounce. But as yet, it’s not obvious where support for that bounce may come in.
