Gold wasn’t the only precious metal that rallied yesterday. Silver and platinum both gained ground too, while palladium – which had sharply outperformed over the past couple of months anyway – also joined the fun today. However the metals have taken a breather today, with gold down and silver flat at the time of writing.
Despite today’s weakness, silver in particular is looking really interesting after it bounced from long-term support around $14 per ounce. At the same time, the gold-silver ratio’s sharp rally came to a halt last month and has gone back below the pivotal area between 82.30-82.50, suggesting that silver could outperform the yellow metal going forward (this does not necessarily mean it will go up).
Technically, silver’s break of the short-term bearish trend line last month was an early indication that prices were going to push higher, particularly after that long-term support at $14.00 held following several failed breakdown attempts.
At the start of this week, silver re-tested a short-term broken resistance at $14.40, which held as support. This confirmed further that the buyers are slowly re-gaining control.
But the bulls have a lot of work to do still and it might be a bit too early to start celebrating, especially given the dollar’s growing strength. Resistance levels such as $15.00 and $15.30 are the key ones to watch. These levels may prove to be tougher to crack.
Still, despite today’s weakness, the short-term path of least resistance is now to the upside and will remain that way until proven otherwise.
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