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Gold and Silver Hung Up on the 200 EMA, Catalyst Needed

by on February 19, 2014 4:12 am BST
 

Gold and silver have paired their gains as traders begin to take profits. The safe-haven metals have each hung up on the 200 EMA on their respective daily charts, which is a key resistance level. A catalyst will be needed to push price active above and beyond, but with the Federal Reserve expected to continue with the reduction in stimulus, the precious metals could see further declines.

In less than two months, gold seen prices appreciate 9.3 percent already. Price action remains in an uptrend, but more to the downside is possible.

The daily chart shows that price action was able to pierce through resistance at $1,327 per ounce, and the 200 EMA, but prices pulled back. Language from the FOMC minutes tomorrow afternoon could be the catalyst for an upward continuation, while the combination of a continued taper and optimistic economic view could send the safe-have lower. A break above the 200 EMA will help send gold to the next level of resistance at $1,352.2, while $1,304.70 and $1,291 remain solid price action support.

1D Chart of GC

1D Chart of GC

Silver, higher year-to-date by 13 percent, has been the recent darling as the US dollar carved out a new low year-to-date; but it, too, became hung up at the 200 EMA. Gold’s little brother has seen the largest rally in 45-years as physical demand in bullion and jewelry increased on economic worries.

Silver futures have come down from technical resistance at $22.06. The uptrend remains intact, but tomorrow will bring volatility as traders position themselves in the US dollar ahead of the FOMC minute.

Price action could see support at $21.515 prior to the FOMC minutes, while deeper support can be seen at $20.866 per ounce. Silver is still in overbought territory with the RSI above 70. If pessimism is projected in tomorrow’s data, silver’s next level of resistance is $22.589.

1D Chart of SI

1D Chart of SI