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Gold and silver rally

Last updated 10/26/2012 12:17 PM EST (GMT -5) 0 Comments - Add your comment

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Fawad Razaqzada

Technical Analyst, GFT

Follow @FawadR_GFT

Precious metals started the day sharply lower, relinquishing all of yesterday’s gain. However, the selling looked more technically-driven and all eyes were on gold as it approached the $1700 level again. It spent the first half of today’s session hovering dangerously above this key level, before eventually rising as speculators trimmed their short positions ahead of the weekend. The buyers jumped on the opportunity, and this helped to push silver prices up, too. Sentiment was also boosted by a stronger-than-expected US GDP number which was buoyed by a rise in consumer spending. Gold is sometimes used as a hedge against rising prices, so the jump in GDP deflator was also supportive. While further price weakness is certainly a possibility, both gold and silver look like they have found a base for a now. In four out of the last five sessions, silver has successfully managed to hold above the 38.2% Fibonacci retracement level ($31.80) of the rally from June to October, which is bullish. Gold is currently trying to take out a bearish trend line. If it can hold above $1717 on a closing basis then that may attract fresh buying interest.

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About The Author

Fawad joined GFT as a technical analyst in 2010 and has since focused on timely market commentary and research for GFT with an emphasis on technical analysis. He achieved his CISI Level 3 Certificate in Investments (Derivatives – Retail) in early 2011.