Initial Short-term Target Zone Reached

Initial targets from two rising ABCD patterns (orange, purple) were reached today, along the 127.2% extended target of a smaller ABCD pattern (light blue). That could lead to a deeper pullback to test support levels before natural gas is ready to proceed higher.

In addition, the 3.39 swing high from January was reclaimed. That swing high is part of the price structure of lower swing highs. Each time natural gas breaks out above a swing high it continues to show strength. Key levels to watch for support include the 3.16 swing high and the 3.02 swing high. A little lower is Wednesday’s low of 2.94, which is close to the top boundary line for the symmetrical triangle. Below there is the 20-Day MA at 2.82.

Pullback Should Find Support Above 3.02 if Bulls Remain in Charge

Nevertheless, if a pullback comes before a new trend high, it will likely be met with support that turns the price of natural gas back up. Yesterday’s bull breakout was potentially significant as several breakouts were triggered around the same time. So far, the bullish reaction following the initial 3.02 breakout is supportive of higher prices. A key upside target is the 2023 peak of 3.64. It makes up part of the downtrend structure. There are also a couple extended targets from the rising ABCD patterns around that level.

Triangle Pattern Points to 3.78

A decisive breakout above that peak would trigger a continuation of the developing uptrend and further confirm the breakout of the triangle pattern. The measure of the larger triangle, that includes the 1.52 swing low, points to a potential target of 3.78 when based on a percentage move. That is above the 2023 peak. When measuring the price distance, the target is around 4.93.

For a look at all of today’s economic events, check out our economic calendar.

• Silver price recovers mildly above $31.00 on heightened geopolitical tensions.
• Ukraine launched UK-supplied missiles in Russia, resulting in a fresh escalation in the war.
• Investors await the flash US S&P Global PMI for November.

Silver price (XAG/USD) bounces back slightly above $31.00 in Thursday’s North American session after a corrective to near $30.80 on Wednesday. The white metal rebounds on fresh escalation in the Russia-Ukraine war, which forced investors to flee to safe-haven assets, such as Silver.

Geopolitical tensions renewed as Ukraine launched United Kingdom (UK)-supplied missiles into Russia, a day after it fired Army Tactical Missile System (ATACMS) provided by United States (US) President Joe Biden that fuelled risks of third world war.

Historically, the appeal of safe-haven assets, such as Silver, improves in times of uncertainty or heightened geopolitical risks.

The outlook of the Silver price remains uncertain as investors doubt whether the Federal Reserve (Fed) will cut interest rates again in the December meeting. The probability of the Fed to cut interest rates by 25 bps to 4.25%-4.50% in December has come down to 56% from 72% a week ago, according to the CME FedWatch tool.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles around 106.60. 10-year US Treasury yields hover around 4.40%.

Going forward, investors will focus on the preliminary S&P Global PMI data for November, which will be published on Friday. Economists expect the overall private sector activity to have improved.

Silver technical analysis

Silver price stays on track toward the upward-sloping trendline around $29.00, plotted from the February low of $22.30, which also coincides with the 200-day Exponential Moving Average (EMA). The white metal faces selling pressure near the 20-day EMA, which trades around $31.40.

The asset weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.

The 14-day Relative Strength Index (RSI) slides to near 40.00. A bearish momentum will trigger if the RSI (14) sustains below the same.

Silver daily chart

• Prices of Gold extended their march north to the $2,670 zone.
• The US Dollar maintained its bid bias amid higher US yields.
• XAU/USD’s immediate up-barrier now comes at $2,700/oz.

Gold prices extended their climb on Thursday, supported by steady geopolitical tensions, despite a firm session for the US Dollar (USD) and modest gains in US yields across the board.

The ongoing uncertainty surrounding the Russia-Ukraine conflict, combined with broader market instability, has underpinned the precious metal’s strong rebound this week. 

Gold marked its fourth consecutive session of gains, surpassing the $2,670 mark per troy ounce and shifting focus toward the critical $2,700 resistance level. This zone poses a significant challenge as bullion looks to build on its recovery momentum.

The rally also coincided with a stronger USD, bolstered by the ongoing “Trump-trade” rally, and US yields, which regained some strength across various maturities.

As the week progresses, attention will turn to key global economic data releases, with preliminary Purchasing Managers’ Indexes (PMIs) set to take center stage toward the week’s end. 

Additionally, market participants are closely following comments from central bank officials, particularly after Federal Reserve Chair Jerome Powell’s recent cautious statements. Powell highlighted the resilience of the US economy but stressed the importance of prudence when evaluating potential future rate cuts.

Looking ahead, gold may face increased scrutiny as recent US economic data and expectations of inflationary Republican policies have heightened the likelihood of interest rates remaining elevated for an extended period. While gold is traditionally viewed as a hedge against inflation, higher interest rates tend to diminish its appeal due to the metal’s lack of yield.

From a market positioning standpoint, speculative interest in gold has weakened. Non-commercial traders reduced their net long positions to approximately 236.5K contracts as of November 12, the lowest level since early June, according to the latest CFTC positioning report. This reduction in long positions, coupled with a second consecutive decline in open interest, indicates a potential loss of momentum in gold’s recent upward trajectory.

Gold daily chart

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows a continuation of the recent breakout of the bullish 100-day Simple Moving Average (SMA) at $2,557, which is near the November low of $2,536. Moving higher, the current weekly peak at $2,673 (November 21) marks the first key resistance area. Beyond this, the next target is the $2,700 round level, followed by the weekly high of $2,749 (November 5).

On the downside, a swift break below the 100-day SMA could shift focus toward the November low of $2,536 (November 14), which serves as a decent support level.

In the short term, the 4-hour chart suggests further room for the current recovery to progress. The Relative Strength Index (RSI) has deflated to the sub-68 region, while the Average Directional Index (ADX) at nearly 40 is indicative that the current uptrend is gathering strength.

Looking upward, the next key resistance to watch is $2,673, followed by the critical 200-day SMA at $2,678. On the downside, the 55-SMA comes first at $2,613, ahead of $2,536.