Last week, we reported on the macro technical aspects of gold and silver using quarterly and monthly charts.
Gold is already overbought, but history suggests that it could become even more overbought. Meanwhile, Silver has set its highest monthly and weekly closing prices in 11 years.
There is room for both metals to move before rigid resistance begins.
Gold is at an all-time high, making its resistance harder to determine.
In March 2024, gold broke through a 13-year-old cup-and-handle pattern, with a clear path to an upside target of $3,000 per ounce.
Although gold seems overbought, it has only risen by 9% in the past two months. Prior to this, in early August 2024, it was trading at levels that were the same as those nearly four months earlier in April 2024.
A more pressing issue is the negative divergence between gold and the S&P 500 Index, which has hit new lows since gold rose by another 10%.
The gold bull market simulation compares gold with the four best cyclical bull markets and the average (dashed line). Currently, the gold bull market is approaching the average level.
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At any point in the next four months, a gold price of $3,000 per ounce will indicate (as shown in the figure) that gold has risen relative to historical prices.
Meanwhile, silver has established support around $28-29 per ounce, but is currently facing daily resistance at $32.50.Silver's monthly and weekly averages have closed at new highs, which is positive.
On the other hand, despite gold prices rising from $2,000 to $2,700, silver's performance still cannot surpass gold. The gold/silver ratio peaked in the spring and has remained within a range.
Nevertheless, a convincing daily close above $32.50 could have silver testing $35, and possibly as high as $37.
Gold is still in the blue sky area after breaking its 13-year cup and handle pattern. Although it is overbought and not outperforming the stock market, it should continue to rise to a measured upside target of $3,000.
Silver's performance has not exceeded gold, but it closed at an 11-year high last week and last month. Even if it cannot outperform gold, the strength of gold will pull it to $35, and possibly reach $36-37.
Investing in gold and silver stocks, continue to focus on quality assets and value. Avoid leveraged plays that appear undervalued but perform poorly at these prices.