Will Gold Be Able to Stay Above Its Resistance Level?

Published on

Gold recently corrected a large part of its previous move, but later traded above an important resistance level. Will it be able to sustain this move?

Gold August High

The above chart features gold price in terms of weekly candlesticks. As you can see, it just approached its August high.

Q3 2022 hedge fund letters, conferences and more

The resistance is provided by the weekly closing prices, and since the current week ends today (Dec. 2), it’s likely that gold’s rally was just stopped or that it will be stopped today.

Gold Dec 1

Gold, just like many other markets, recently corrected ~38.2% of its previous move.

Gold Rallies

Yesterday, however, gold rallied above this important resistance level. Now, the question is: will gold be able to hold this move, or will it invalidate the breakdown shortly?

The RSI just moved above 70, and it’s a classic sell signal, which had worked many times before.

The weekly resistance that I wrote about earlier is an important factor as well.

Not to mention another signal from the silver-to-gold link (chart courtesy of https://goldpriceforecast.com/).

Gold Silver Chart

Silver moved higher to a much bigger extent than gold did in today’s pre-market trading, and while the size of both moves is not huge, it’s something that confirmed the previous indications, and it’s a bearish sign.

The reason is that the silver market is much smaller than the gold market is, and in addition to the above (and in relation to it), silver is much more popular with the investment public. The latter tends to buy close to the tops and sell close to the bottoms. Consequently, the particularly strong performance of the white metal indicates that the investment public is “buying like crazy,” and this, in turn, is a sign that a top is being formed.

The reaction (rally) to jobless claims yesterday is consistent with the preceding. Market participants are doing the opposite of what makes sense (so, it seems that it is the general public that is making the purchases). Weaker jobless claims mean the Fed has more leeway to raise interest rates, and higher real interest rates are one (the other is the USD Index) of the key fundamental drivers pointing to lower gold prices.

Naturally, the above is up-to-date at the moment when it was written. When the outlook changes, I’ll provide an update. If you’d like to read it as well as other exclusive gold and silver price analyses, I encourage you to sign up for our free gold newsletter.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Sunshine Profits: Effective Investment through Diligence & Care

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice.

Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported.

The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports.

Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.