Gold Positioned for Pullback

oldpigwang

Spot Gold (NY Close): 1793.05 // +52.65 // +3.03%
A recovery in risk appetite is likely to undermine gold prices in the near term amid fading safe-haven demand. Indeed, short-term correlation studies continue to show a significant inverse relationship between the yellow metal and the S&P 500. As with oil, US weekly jobless claims figures represent the next major inflection point. Notably, the macro-level headwinds facing the global recovery remain broadly unchanged, so the path of least resistance favors risk aversion and any near-term improvement (which corresponds to lower gold prices) is likely corrective.
Prices are showing signs of fading strength with a bearish Harami candlestick pattern forming below the $1800 figure while RSI studies are in heavily overbought territory and revealing the beginnings of negative RSI divergence. Initial support stands at 1773.26, the 23.6% Fibonacci retracement level, but the key level to watch is the 50% Fib at 1727.15, a boundary that coincides with resistance-turned-support at a rising channel top. Through here would help neutralize immediate upside pressure for a more neutral tone.
Spot Silver (NY Close): $39.28 // +1.71 // +4.54%
Identifying a well-defined fundamental catalyst for silver prices has been tough in recent days, with gold’s safe haven allure not translating particularly well for the cheaper metal. Technically, prices are showing a bearish Harami candlestick pattern below Andrew’s Pitchfork resistance, hinting a pullback is ahead. Initial support lines up at $37.72, while a break above pitchfork resistance targets the underside of rising trend line support-turned-resistance set from early July, now squarely at the $41.00 figure.
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