Gold and Silver Technical Outlook: Range Play

Gold, XAU/USD, Silver, XAG/USD – Technical Outlook:

• Gold and silver continue to tread their respective ranges.
• By themselves, this month’s gains in XAU/USD and XAG/USD are not enough to suggest that the outlook for precious metals has changed to a bullish one.
• What are the key levels to watch?

GOLD SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

The limited pullback this week and still buoyant momentum suggests that gold could make one more attempt to test key resistance that has occurred so far this month.

Last week, XAU/USD declined from near a key barrier, a little earlier than expected. The convergence ceiling is at 1800-1820, which includes the 200-day moving average and at least three trend resistances – one from the end of 2021, another from July, and the third from August.

Daily Chart of XAU/USD

Chart Created With TradingView

This follows a break earlier in the month above a key ceiling at the October high of 1729, confirming that downward pressure has faded for now. It is the first time since April that the yellow metal has crossed over a major pivot / price high.

Despite the recent pullback, gold held a vital cushion – the resistance-turned-support at 1729, roughly around the 38.2% retracement from November 3-15. Given that the Moving Average Divergence Divergence (MACD) indicator is comfortably in positive territory (indicating that the trend is up), a retest of 1800-1820 cannot be ruled out.

While short-term dynamics show a mixed scenario, it remains unclear whether the rebound this month is a precursor to a reversal (of the downward trend) or a corrective rally due to the steep losses this year. In the context of a multi-week picture, the trend remains down.

SILVER SHORT TERM TECHNICAL OUTLOOK – NEUTRAL

While gold managed to stay below the 200-day moving average, its peer silver briefly rose above the long-term average but failed to stay there. The bearish reversal on November 15, highlighted in last week’s update, kept a lid on the precious metal.

Daily Chart of XAG/USD

Chart Created With TradingView

The long-term average in XAG/USD is around another hurdle at the upper edge of a slightly upward-sloping channel from August, but slightly below the June high of 22.50. This barrier is critical for the near term. A decisive break above it could clear the way for further gains in XAG/USD.

On the downside, a cross below Monday’s low of 20.55 would reaffirm the range in the near term.

— Written by Manish Jaradi, Strategist for DailyFX.com