Gold prices began to recover on Thursday after a four-day decline. While the metal found some support around $3,900, it hasn’t gained much momentum yet and still struggles to surpass the $4,000 mark, which keeps a bearish trend in place for now.
Precious metals are slowly regaining some losses as traders seek clarity amidst discussions about a potential China-US trade agreement. However, the market took a hit on Thursday, largely due to Federal Reserve Chairman Jerome Powell’s remarks that raised doubts about interest rate cuts in December, leading to a rise in US Treasury yields.
Technical analysis: Gold’s bearish correction could extend to $3,800
The technical outlook indicates prices searching for direction beneath $4,000. The Relative Strength Index (RSI) on the 4-hour chart has bounced back from lows but is still below the 50 threshold. At the same time, the Moving Average Convergence Divergence (MACD) displays weak upward movements. The 61.8% Fibonacci retracement from the bullish trend between September 18th and October 17th around the $3,920 area acts as a support, and the ongoing bearish trend is expected to persist. If prices decline further, the October 2nd low near $3,820 could become the next target. Additionally, the AB=CD retracement from the peak near $4,380 sets a measured target at $3,795.
On the opposite side, bulls could focus on the October 23rd peak of $4,150. A breakout above the highs of Tuesday and Wednesday, which were around $4,030, would signal a stronger recovery, particularly towards the previous support area near $4,220 recorded on October 20th.
Silver FAQ
Silver is another precious metal that’s actively traded by investors. Historically, it’s been recognized both as a store of value and a means of transaction. While it may not have the same popularity as gold, many traders consider silver to diversify their portfolios, particularly during times of inflation. Investors can acquire physical silver in the form of coins or bars, or they can opt for exchange-traded funds mirroring market prices.
The fluctuating price of silver is affected by several factors. Geopolitical tensions or a looming recession could push prices higher due to its appeal as a safe haven, though not as significantly as gold. Being a non-yielding asset, silver generally rises when interest rates fall. Its prices are also influenced by the US dollar (XAG/USD); a strong dollar typically suppresses silver prices, while a weak dollar can elevate them. Other aspects, including investment interest, mining supply (since silver is more abundant than gold), and recycling rates also play roles in pricing.
Silver is heavily utilized across various industries, particularly in electronics and renewable energy, owing to its superior electrical conductivity compared to copper and gold. This increased demand can drive prices up, while a fall in demand tends to lower prices. Economic activity in major markets like the US and China also impacts price shifts, as both have extensive industrial sectors that utilize silver. Additionally, consumer interest in silver jewelry, especially in India, contributes to price changes.
Price trends for silver often align with those of gold. When gold prices increase, silver typically follows suit due to its comparable safe-haven characteristics. The gold/silver ratio illustrates how many ounces of silver equate to the value of one ounce of gold, helping to assess their relative valuations. Investors might interpret a high ratio as a sign that silver is undervalued or gold overvalued, while a low ratio can suggest the opposite.
