#Gold & #Silver Technical Analysis (19 June 2023)

Gold Technical Analysis: Bullish Rebound Lacks New Momentum

• The US Federal Reserve still abandoned the tightening policy temporarily, as it kept the US interest rate unchanged last week.
• This is negatively affecting the US dollar, and in return positively for the price of XAU/USD, which jumped to the $1968 resistance level.
• The pair recovered from gold sales that pushed it towards the support level of 1926 dollars an ounce, its lowest in three months.
• Trading started this week stable around the level of 1958 dollars an ounce.

Quiet trading is expected today in light of an American holiday, before investors’ attention returns again this week in light of the anticipation of the testimony of US Central Bank Governor Jerome Powell.

Gold had a strong rally in early May, posting an impressive 26.3% gain in 7.2 months. But after a rapid rise to $2050 an ounce and challenging all-time record nominal highs, the gold price was already expanding. It traded at 1,132 times its 200-day moving average, and gold was overbought. While still under the Deadly Danger Zone up, a health drop was in order to rebalance Morale.

That is exactly what happened over the last several weeks. As the price of gold fell 5.4% to $1,941, with very hawkish statements from senior Federal Reserve officials playing a big role. While the sharpness and magnitude of this mid-calf dip was normal, it quickly eliminated excessive greed. Herd psychology slipped back to the downside, as traders quickly forgot about the strong gold influence that led to it. Gold fell increasingly.

Over the several weeks since the initial sell-off, gold has stalled sideways. That was a consolidation high, in the middle of the top of the bullish gold trading range. The technical damage of this decline was therefore very slight, and certainly does not justify such pessimistic sentiments. But the downside and apathy are par for the course in the weakest seasonal season of the year for gold, the dreaded summer slump. Earlier this week, the US Federal Reserve Committee voted to keep the US benchmark interest rate unchanged at 5.25% in line with expectations. However, interest rate expectations for the current year have now risen to 5.6% from 5.1% in the previous update, while those for years one and two have increased to 4.6% and 3.4% respectively from 4.3% and 3.1%. The long-term interest rate forecast remained unchanged at 2.5%.

Technical analysis of gold prices XAU/USD:

In the near term, and according to the performance on the hourly chart, it appears that the XAU/USD gold price is trading within a bullish channel formation. This indicates a significant short-term bullish bias in market sentiment. Therefore, the bulls will look to extend the current gains towards $1966 or higher to the $1978 resistance an ounce. On the other hand, the bears will look to pounce on pullbacks around $1945 or lower at $1933 support.

On the long term, and according to the performance on the daily chart, it appears that XAU/USD is trading within a sideways channel formation after completing the double top reversal pattern. This indicates that the bulls are trying to prevent the bears from controlling the price. Therefore, the bears will be looking for a break-down at around $1.915 or lower at $1872 an ounce. On the other hand, the bulls will target long-term profits at around $1992 or higher at $2033 an ounce.

Silver Forecast: Exhibits Strength and Potential for Upside Amid Volatility

Caution is advised, but the strategy of buying silver on dips appears favorable, at least until a breakdown below the 200-Day EMA occurs.

• Silver experienced a modest rally during Friday's trading session, surpassing the 50-Day Exponential Moving Average and crossing the $24 level in the futures market.
• Breaking above the $24.50 level could pave the way for further gains, potentially leading to a move toward $25. Market participants closely monitor the 50-Day EMA, which continues to influence price action.
• Additionally, the formation of a hammer candlestick on Thursday adds to the bullish sentiment. The bounce from the area near the 50% Fibonacci level, coupled with the position just above the 200-Week EMA, further suggests upward pressure.

Given the inherent volatility of silver, one can expect increased price swings, especially considering the current concerns surrounding central banks. While most central banks maintain a tight monetary policy, the Federal Reserve chose to skip rate hikes in the previous month. This perceived weakness from the Federal Reserve could offer opportunities for investors to capitalize on. Buyers are likely to enter the market during dips, and as long as the price remains above the 200-Day EMA, a prevailing bullish sentiment is expected. Nevertheless, the market is currently grappling with the question of whether the momentum to the upside can be sustained.

Be Cautious, Though Market Conditions Favor a Bullish Stance

Caution is advised, but the strategy of buying silver on dips appears favorable, at least until a breakdown below the 200-Day EMA occurs. The 200-Day EMA holds significance for many market participants. Additionally, the 61.8% Fibonacci level lies just below it, further enhancing its importance as a potential support level. A breakthrough above the $25 level is likely to attract more traders driven by "fear of missing out", potentially fueling additional market activity. It is essential to monitor the movements of the US dollar, as its negative correlation with silver suggests a direct reflection of forex market dynamics.

Ultimately, silver has demonstrated strength and shows potential for further upside movement. The breach of the 50-Day EMA and the $24 level highlights positive momentum. The market's response to the Federal Reserve's decision not to raise rates contributes to the perceived weakness, creating opportunities for traders. Buying silver on dips remains a viable strategy, as long as the price remains above the 200-Day EMA. The importance of this level, combined with the presence of the 61.8% Fibonacci level, further solidifies its significance. Breaking above $25 could trigger increased market activity from FOMO traders. Observing the US dollar's movements will provide valuable insights into silver's future performance, given their negative correlation. While caution is advised, the current market conditions favor a bullish stance on silver.

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