Gold and Silver Resilient as Volatility Declines, Cut Odds Dip
Gold and Silver Resilient as Volatility Declines, Cut Odds Dip
Gold prices are down 2.03% for the month so far
- Gold prices (/GCG4) are back in positive territory for the week, as are silver prices (/SIH4).
- Fed rate cut odds for March are at their lowest implied probability for the year, holding back precious metals.
- The immediate road ahead may still pose challenges for /GCH4 and /SIH4.
A push higher by U.S. Treasury yields amid a sharp retracement in Fed rate-cut odds for March–from 81% at the start of last week to 41% today–has hampered precious metals. But gold (/GCH4) and silver prices (/SIH4) are proving resilient in the face of headwinds this week, including a stronger U.S. dollar.
The shifting fundamental backdrop has done little to upset the near-term technical structure for both /GCH4, which continues to consolidate, and /SIH4, which is trending lower after breaking a multi-month uptrend.
/GC Gold price technical analysis: daily chart (April 2023 to January 2024)
Gold prices (/GCH4) are in a familiar area, continuing to funnel into the vertex of a symmetrical triangle that’s been forming since November.
A breakout may be nearing soon if this is the correct technical interpretation; a shift outside of the triangle may not invalidate the view that a sideways consolidation may be prevailing. Regardless, directionless, rangebound trading conditions are prevailing in the near-term.
Only a move below the early-December swing low at 1987.9 or the late-December swing high at 2098.2 would invalidate the current perspective.
/SI Silver price technical analysis: daily chart (April 2023 to January 2024)
Unlike gold, silver experienced a more meaningful breakdown in price action, just one day removed after hitting fresh yearly lows following the break of the uptrend from the October, January, and December swing lows.
Momentum remains bearish, with /SIH4 below its daily 5-, 13-, and 21-day exponential moving average (EMA) envelope, which is in bearish sequential order. Slow stochastics are holding in overbought territory. Moving average convergence/divergence (MACD) is trending lower below its signal line. Amid a diminished volatility environment, the charts appear unfavorable to look to put sellers in the short-term.
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
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