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Technical analysis: Medium-term price outlook for gold and silver

2024-10-15

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Technically, gold is overbought, but history suggests it could get further overbought. Meanwhile, silver hit its highest monthly and weekly closes in 11 years.

Both precious metals have room to move up before creating stronger resistance.

Gold is at an all-time high, making it harder to peg its resistance.

With gold breaking out of a 13-year cup-and-handle pattern in March 2024, gold has a clear upside path to $3,000/oz.

While gold looks overbought, it has only risen 9% in the past two months. Prior to that, in early August 2024, it was trading at the same level as it was in April 2024, nearly four months earlier.

A more pressing issue is the negative divergence in the gold-to-S&P 500 ratio, which has made lower highs since gold rallied another 10%.

The gold bull market simulation chart plots gold against the four best cycle bull markets and the average (dashed line). The current gold bull market is moving closer to the average.

If gold moves to $3,000/oz any time in the next four months, it would mean that gold is already higher relative to historical levels (as seen on the chart).

Meanwhile, silver has established support around $28-29/oz but is now facing daily resistance at $32.50.

Silver has closed at new highs on a monthly and weekly basis, which is positive.

On the other hand, silver has not been able to outperform gold despite the rally from $2,000 to $2,700. The gold/silver ratio (inverted on the chart) peaked in the spring and is currently range-bound.

Nevertheless, a daily close above $32.50 could see silver testing $35 and possibly as high as $37.

Gold still has room to move higher after breaking out of a 13-year cup-with-handle pattern. Although it is overbought and underperforming the stock market, it should continue to move higher to reach its upside target of $3,000.

Silver is not doing any better than gold, but it closed at 11-year highs last week and last month. Even if it can’t outperform gold, gold’s strength will pull it to $35, maybe even $36-$37.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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Technical analysis: Medium-term price outlook for gold and silver

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