Is the worst over for gold/silver? XAU/USD and XAG/USD price settings

Gold, XAU/USD, Silver, XAG/USD – Forecast:

• Precious metals rose due to geopolitical concerns.
• both of them gold And silver They are testing major resistance.
• What are the expectations and what are the key levels to watch for XAU/American dollar And XAG/USD?

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Is the worst over for gold and silver? Probably not.

Potential safe haven offers and short covering as tensions escalate in the Middle East have boosted gold this month. Dovish comments by US Federal Reserve officials indicating that the US central bank has focused on interest rates also support the yellow metal. In this regard, the main focus is on Fed Chairman Powell’s speech later this week. The market expects there is about a 90% chance that the Fed will keep interest rates unchanged at its October meeting. 31-November. 1 meeting.

While rising geopolitical uncertainty could keep demand for precious metals healthy, unless the broader path for US Treasury yields/real yields reverses, the path of least resistance for gold remains sideways to the downside. Geopolitics is one risk that could slow or reverse the yellow metal’s decline, as shown in the quarterly forecast. “Q4 Gold Fundamental Outlook: Weakness Continues as Real Yields Rise,” published on October 6, and “Q4 Gold/Silver Technical Outlook: The tide remains against XAU/USD and XAG/USD,” published on October 1.

XAU/USD daily chart

Chart created by Manish Garadi using TradingView

Gold: The rise is facing a barrier

On the technical charts, gold encountered significant convergent resistance at the September 1953 high, the 89-day moving average, the 200-day moving average, and the upper edge of the Ichimoku cloud on the daily charts. Despite the recovery, the 14 Relative Strength Index (RSI) was unable to cross 60-65, indicating that the rise in recent sessions is not the start of a new trend.

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XAU/USD weekly chart

Chart created by Manish Garadi using TradingView

This is because the recovery since early October looks similar to the recovery that occurred in mid-2022. Oversold conditions (RSI below 20) led to a bounce towards the 89-day moving average and the cloud. Gold then reached a new low a few months later. Any break below Monday’s low of 1905 would indicate that the upward pressure from last week has faded.

On the upside, as noted in the quarterly forecast, XAU/USD needs to rise above the July 1987 high for immediate downside risks to dissipate. Furthermore, a break of the May 2072 high is needed for the outlook to turn bullish.

XAG/USD daily chart

Chart created by Manish Garadi using TradingView

Silver: It has not yet broken major resistance

Silver’s recovery has encountered stiff resistance on the uptrend line from late 2022, slightly above support-turned-resistance at the August low of 22.20. Above that, a major converging hurdle is the 200-day moving average, the late September high at 23.75, and the upper edge of the Ichimoku cloud on the daily charts. XAG/USD needs to cross the 23.25-23.75 area for the immediate bearish pressure to dissipate.

From a slightly broader perspective, as shown in the Q4 forecast, the XAG/USD pair needs to break above the 25.50-26.25 resistance level for the outlook to turn positive. See “Q4 Gold Fundamental Outlook: Weakness Continues as Real Yields Rise,” published on October 6, and “Q4 Gold/Silver Technical Outlook: Tide Still Against XAU/USD and XAG/USD,” published on October 1.

Any decline below the lowest level recorded on Monday at 22.50 may open the door towards the lowest level recorded on Thursday at 21.75. The next support is at the early October low at 20.50, followed by stronger support at the March low at 19.85.

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— Written by Manish Jaradi, DailyFX.com Strategist

— Connect with Jaradi and follow him on Twitter: @JaradiManish