Gold and silver have surged far beyond what falling yields and a softer dollar alone would explain, with gold up 8.6% and silver up 11.2% over five trading sessions. Both metals broke key technical levels this week, and momentum indicators point to further upside.
Gold has surged 8.6% over the past five trading sessions, compared with a model-implied gain of just 0.5% based on typical moves in the dollar and Treasury yields. That gap ranks in the 99.9th percentile of comparable five-session periods over the past three years.
Silver moved even further out of line with its usual drivers. The metal has gained 11.2% against a model-implied rise of 0.9%, putting its macro-adjusted move in the 96.4th percentile over the same three-year window.
Dollar and yields ease after the July FOMC
The breakout coincided with an easing in macro conditions. The US Dollar Index has fallen around 1.7% from its late-July peak, helped in part by the intervention episode involving the Japanese yen. US two-year and 10-year Treasury yields have also pulled back from recent highs, with the two-year move largely reflecting the retracement in hawkish Fed pricing following the July FOMC meeting.
Gold and silver retain a modest inverse relationship with the dollar and Treasury yields, and that relationship has strengthened recently. Over the past 60 sessions, gold's correlation with the DXY stood at -0.50 and silver's at -0.51, above their three-year correlations of -0.39 and -0.30. Against 10-year yields, the relationship is weaker, at -0.24 for gold and -0.19 for silver.
Gold bulls target the 200-day moving average
Gold broke cleanly above resistance at $4,367 late Monday, a level that had previously acted as both support and resistance, before touching its 100-day simple moving average and extending the move further. The 200-day moving average now sits as the next overhead barrier, around the psychologically important $4,500 mark.
RSI 14 continues to trend higher above 50, and MACD has staged a bullish crossover and flipped positive, favouring pullbacks and breakouts over short positions. Buyers could target the 100-day moving average or $4,367 on dips, with upside targets including the 200-day average, then $4,580, $4,650 and $4,775. A reversal beneath $4,367 would raise the risk of sideways trade instead.
Silver breakout brings $71 into view
Silver broke above its 50-day simple moving average, the downtrend running from this year's record high, and horizontal resistance at $63.29, and has since pushed higher toward resistance at $67.
The oscillators point the same way as gold's. RSI 14 sits around 64 and is not yet overbought, and MACD has also turned positive after a bullish crossover. A pullback toward $63.29 could offer an entry for longs, while a break and hold above $67 would target the 100-day moving average and then $71, where the 200-day average coincides with resistance that capped the price in June. The advance resembles a falling wedge, though the pattern has been tested only a few times so far.
Source: Investing.com
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