What's Next For Gold And Silver?
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One month ago, when gold was just under $1,300, I wrote a piece in which I showed how the “smart money” was betting that gold and silver would decline after their January rally. Since then, gold fell to under $1,200 and recently stabilized just above $1,200. In this update, I will analyze where gold and silver are heading next.
In late-January, gold bumped its head on its $1,300 resistance level and has been falling in a channel pattern since then. Gold currently sits above its $1,200 psychological support level that it has struggled to fall under for two years. If gold experiences an upside breakout from its channel, it may try to re-test its $1,300 resistance level once again. If gold cannot break above its channel, it may continue to follow the channel down to its next obvious support level at $1,150.
Source: Finviz.com
Like gold, silver has been falling in a channel pattern since late-January. If silver can successfully break out of its channel, it may try to re-test its next obvious resistance level at $19. The $19 level is significant for silver because it was the key support level for much of 2013 and 2014 before the metal finally fell beneath it in late-2014. If silver continues to follow its channel to lower levels, $15 is the next obvious support level it may try to reach for.
Source: Finviz.com
From a longer-term perspective, gold still remains in its two year old trading range between $1,200 and $1,400. If gold is finally able to bounce significantly off of $1,200, it will likely try to re-test its $1,400 resistance level. If gold finally experiences a convincing break below $1,200, however, it may drop to $1,000 or even lower. In my last gold and silver update, commercial gold futures hedgers (often considered the “smart money”) were betting that gold would drop after touching $1,300. Since then, the commercial hedgers have pared back their short position.
Source: Finviz.com