Gold chart analysis

The price of gold formed a new high this morning at the $1712 level. Gold is currently meeting resistance at the 50.0% Fibonacci level, and we could see a smaller drop to $1690 at the 38.2% Fibonacci level. To continue the bearish option, we need a negative consolidation and a further pullback in the price of gold. First, we could have possible support at the $1680 level. If we fail to maintain that level, the gold price will continue to fall. Potential lower targets are $1670 and $1660 levels. For a bullish option, we need a continuation of positive consolidation and a move above 78.6% Fibonacci. Then we need to stay above and continue the recovery of the gold price with a new bullish impulse. Potential higher targets are $1720 and $1730 levels.

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Silver chart analysis

Silver price made a great jump in the last week from $17.95 to $21.00 level. Now we see that this bullish impulse has stopped, and we have a minor pullback to the $20.78 level. In August, the price of silver tried to break above, but that attempt ended in failure. Today we made a break, and we need a positive consolidation to keep us here. The silver price also benefits from the dollar index’s current pullback from its multi-decade highs. Based on that, the price of silver could continue up to the $22.00 level, and the last time we were there was at the beginning of June. We need negative consolidation and price pullback to lower support levels for a bearish option. Potential targets are $20.50, $20.20 and $20.00 levels.

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Market Overview

The Bank of England’s willingness to buy up to £5 billion of long-term gilts is dragging US bond yields off multi-year highs and continuing to weigh on the dollar. In addition, growing concerns about a deeper economic downturn in the US and Europe offer additional support for gold. Fears were further fueled by disappointing US data on Monday, which showed manufacturing activity contracted in September.

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