Gold and silver move away from key resistance as bullish momentum wanes


gold and silver analysis

  • Gold starts the week on the backfoot with main focus on US CPI
  • Silver respects resistance zone ahead of US CPI
  • Trading the gold market involves a thorough understanding of the fundamental factors that determine gold prices such as demand and supply, as well as the impact of geopolitical tensions and wars. Learn how to trade safe haven metals by reading our detailed guide:

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Gold volatility, as measured by the Gold Volatility Index (GVZ), increased before last weekend, but has decreased at the beginning of the week. It could be argued that as the Israel Defense Forces advanced into Rafah, there was a little caution in the market, resulting in late bids in the precious metals.

30-day implied volatility showed an increase and still remains relatively high. However, the current level is somewhat lower than the panic that was caused by the crisis of US regional banks in March 2023.

Gold Volatility (GVZ) Chart

Source: Trading View, prepared by richard snow

Gold starts the week on the backfoot with main focus on US CPI

Gold has seen a notable decline on the first trading day of the week – which is not at all surprising, given that US CPI is due on Wednesday and Jerome Powell speaks on Tuesday. The precious metal appears to have tagged trendline resistance before the decline late last week and continued in that vein on Monday.

Since the recent all-time high, gold has largely pulled back as traders and investors consider their next move. US data has been soft, especially in the jobs market as the NFP missed estimates and last week's initial jobless claims printed significantly higher than previous data. This provides a more dovish outlook for the dollar as the upside potential appears limited should inflation ease in April. A lower dollar supports gold prices, but gold has risen and fallen in line with the dollar – contrary to the usual inverse relationship seen between the two.

If bears pull gold prices lower from here, $2,319.50 represents an immediate support level, followed by a low of $2,277. The upside target appears at the resistance zone and trendline resistance around $2,360.

Gold (XAU/USD) daily chart

Source: Trading View, prepared by richard snow

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weekly 6% -2% 3%

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Silver respects resistance zone ahead of US CPI

Like gold, silver has also seen a long-term bullish trend and has also failed to recapture recent highs. $28.40 proved to be a challenge for the most recent bullish momentum as price action reached this area late last week and then fell below it. This zone emerged during the years of 2020 to 2021, where a continued rejection of higher prices can be seen across the broader sector.

The next level of significance to the downside emerges at the 78.6% Fibonacci retracement ($27.41), followed by the low at $26.00. The RSI also appears to have rounded up and is currently moving downwards. The upward targets will require a new catalyst and US inflation could help it get there, but early estimates suggest cost pressures will show signs of easing in April, which could weigh on the precious metal. . Resistance remains at $28.40 and enough impact is needed to tag the important level at the all-time high of $29.80.

Silver (XAG/USD) Daily Chart

Source: Trading View, prepared by richard snow

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—Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX



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