The price of gold extended the overnight correction from the 1,295 USD zone and remained under some selling pressure through the early European trading session.
Gold price declined recently and tested the 1,275 USD support area. The price started a solid recovery later and bounced back above the 1,280 USD and 1,282 USD resistance levels. There was a close below the 1,288 USD resistance and the 50 hourly simple moving average. Moreover, there was a break above a major bearish trend line with resistance at 1,287 USD on the hourly chart.
The price is now trading well above the 50% Fib retracement level of the last decline from the 1,298 USD high to 1,276 USD low. The current price action is positive and it seems like the price may rise towards the 1,292 USD or 1,294 USD resistance levels.
The 1,280 USD horizontal level is likely to protect the immediate downside trend on the gold price, below which the commodity is likely to accelerate the fall towards the 1,269-1,268 USD region en-route 1,260 USD support. On the flip side, any meaningful up-move beyond 1,285 USD area now seems to confront some fresh supply near the 1,290 USD region, which is closely followed by a strong resistance near the 1,295 USD horizontal zone.
Silver technical analysis
During trading yesterday, silver fell from 15.70 USD per ounce to 15.63 USD per ounce. This morning it traded at 15.52 USD.
Technically, the price of silver is through the 23.6% retracement Fibo of the summer 2016 highs declines to date located at 15.67 with the confluence of the weekly 50 SMA which also meets the December 2017 double bottom lows.
The upside bias is supported with a rising weekly RSI and positive MACD. However, daily RSI is struggling in overbought territory with the price at a critical resistance level. so long as the price can keep above the pivot, R1 that protects the 16 handle is likely to come under pressure.
If silver overcomes the resistance range of 15.73-15.75 USD, the aim of the move will be reaching and testing the zone 15.86-15.87 USD. Upon success, the upward trend may continue at 15.92-15.94 USD.
In case the silver fells below the support area of 15.55-15.53 USD, the next support will be the zone 15.48-15.47 USD. In a breakthrough, the downward trend may continue to 15.36-15.34 USD.
Gold and precious metals forecast for 2019
At the beginning of 2019, we see clear support for gold and other precious metals like silver. Only for the last month until January 8, the gold appreciated by about 2.50% or over 50 USD per ounce and climbed to just over 1,300 USD per ounce.
At the same time, the silver jumped from 14.21 USD per ounce at the beginning of December to 15.87 USD per ounce in the early days of 2019. This seems to confirm the projections that 2019 could be the year of the metals.
The gold started 2018 with an upward trend, but it quickly entered in a range by mid-May. On May 15, this range of 1,300-1,365 USD was pushed down, resulting in a steep downward movement to 1,160 USD per ounce.
Two of the major factors influencing the price of gold are interest rates, yields on Treasuries and trends in the dollar index.
With regard to the US dollar, most Fed interest rate hikes in 2019 are already calculated in its exchange rate, and they are unlikely to push greenback upward in the long-term unless central bankers bring a surprise to the markets. Meanwhile, most expectations are that the US economy will slow down next year, which may also negatively affect the USD.
Therefore, with such a coincidence, it is quite normal to predict growth in gold and precious metal prices as a whole. At the end of November, gold is trading at about 1,220 USD per ounce, and in 2019 it is realistic to expect returns to at least 1,300-1,365 USD per ounce from the beginning of the year.
Silver is another metal that can take advantage of potential low-risk market moods. It should be noted that in November silver fell to a 3-year low just under 14 USD. In 2019 precious metal can recover its losses in 2018 and return over levels of over 18 USD per ounce.