Gloomy Days Ahead For Gold & Silver

Gold traded lower last week, and retested support at $ 1564.00. Selling escalated in European trading hours as negative PMI and the weaker GBP and Euro could spark margin selling. As we approach the US market, safe haven buying appears and pushes prices as high as $ 1587.00 (38.2%) resistance level. The rally lacks momentum as gold takes a breather and consolidated lower to $ 1575.00. We remain neutral bearish in the short term, and will only change our stance if it manages to take out $ 1592 (50%).

Technically, the MACD is attempting to cross higher but is still rolling in the negative zone. Stochastic is mixed, and this may indicate a longer period of consolidation ahead. RSI is still at the oversold zone which may give some support.

We will short the yellow metal at $ 1555 and target $ 1535. Should prices find support at $ 1575 and move above $ 1595, then we look to enter a long trade and target $ 1625 area. Resistance: $ 1587, $ 1592, $ 1625 (50%), $ 1650, $ 1686, $ 1697 (previous high) Support: $ 1564, $1555, $ 1545, $ 1525, $ 1522 (2012 low).

Silver managed to hold onto its gain after the severe sell off that took it to a new low of $ 27.93. Price broke higher after the overextended sell off crossing below the bottom Bollinger band. The rally took silver as high as $ 28.78 below the upper Bollinger band, where it then consolidated above the 38.2% retracement level at $ 28.51. It is too early to take any position on silver but a follow through buying will help it to overcome the $ 29.00 level again.

Last week, silver bull put up a strong fight and creates a potential hammer reversal on the daily chart. Volume rose suggesting strong interest but the stochastic fast line is still stuck and the MACD rolling ever closer to cross higher. The Bollinger band is trying to converge and at the moment prices may further consolidate.

Looking to buy if $ 29.15 is given and place a long trade to target $ 29.50. Resistance: $ 29.50, $ 29.74 (38.2%), $ 30.19 (50%) Support: $ 27.93, $ 27.50