Gold and silver are potentially coiling up underneath the 200 EMA, on the daily chart, for a potential spike north as economic woes continue globally and geo-political concerns escalating in Ukraine. Both precious metals saw a minor pullback but have been tracking equity markets.
Gold, currently trading at $1,331 per ounce, has been able to stretch above the 200 EMA and resistance level of $1,327 per ounce in early trade. The strength in momentum has increased with the ADX sloping through 39. The + DMI pulled back last week and is currently flat. However, the trend still remains to the upside. A pullback can be seen at $1,317 with deeper support at $1,310.20 per ounce.
Gold has seen a resurgence after the United States is deep pullbacks in the labor market and housing sector. Market participants are worried whether or not the economy can recover without the Federal Reserve’s massive shot of hopium. “It remains to be seen if recent weakness in U.S. economic data is really due to the weather or if it’s something investors should be more concerned with,” said Sun Yonggang, macroeconomic strategist at Everbright Futures. Yonggang said the higher prices will turn off physical bullion investors; however, this could fade if the economic climate worsens.
Silver bounced off support at $21.51 but has been contained under $22 per ounce. A bullish flag pattern has been set up with silver’s huge run up with the recent dollar weakness. A break to the upside is highly probable with this pattern. Potential upside target at the next level of resistance at $22.71 per ounce. Support will be at $21.51 and $20.90.