Gold and Silver Outlook: Bearish Reversals Signal Further Downside

Gold and silver prices are turning lower after bearish reversal patterns emerged across both metals, with fading safe-haven demand and a firmer US dollar weighing on prices. Gold’s failed breakout above 4900 has shifted focus towards key support levels, while silver is showing similar technical weakness.

Positioning is also softening, reinforcing a bearish near-term bias. Any short-term bounce may provide opportunities for sellers to re-enter if resistance holds.

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Gold Rally Fades as Safe-Haven Demand Eases

My mid-April view that gold’s rally was running out of steam proved on point, with the metal topping out on April 17. Prices were already tracking towards a fourth consecutive weekly gain, but the daily chart had turned choppy, with overlapping candles and limited progress compared to the strong move seen earlier in the month.

Following a failed breakout above 4900, downside momentum accelerated on April 21 after Iran skipped highly anticipated ceasefire talks. However, President Trump extended the ceasefire regardless, effectively removing a key geopolitical risk premium. With safe-haven demand fading, gold has continued to trend lower since.

Source: LSEG

Gold Futures (GC) Technical Analysis

Bearish Reversal Pattern Signals Lower High
The US dollar’s rebound on Monday weighed on gold, which printed a prominent bearish outside day. It also marks the third candle of a 3-bar bearish reversal pattern (evening star), likely confirming Friday’s doji as a lower high within the broader downtrend. The move stalled just shy of the 4700 handle and monthly pivot point.

This brings the 200-day EMA (4406), near prior swing highs and lows, and the 200-day SMA (4355) into focus as initial downside targets. Longer-term volume point of control (VPOC) levels also sit at 4306 and 4180 should the 200-day averages give way.

Key Support Levels and Bounce Scenarios to Watch

The presence of multiple support levels above 4000 raises the possibility that gold could be forming an important swing low above 4100.

On the 4-hour chart, prices held above the weekly S1 pivot, with a small inside bar into the US close hinting at demand around current levels. This opens the door for a minor bounce in Asia or later today, which could provide an opportunity for bears to fade strength—seeking signs of a swing high and a move towards the monthly S1 pivot near 4461.

Source: COMEX, TradingView

Silver Futures (SI) Technical Analysis

A swing high also appears to have formed on the silver daily chart, with Monday’s bearish engulfing candle forming the 2-bar bearish reversal pattern – dark cloud cover. The fact it formed at the 20-day EMA and just below the 50-day EMA adds wright to the near-term bearish case, as does the bearish clues on the gold daily chart.

Bears could target last week’s lows and the $70 handle while silver prices remain beneath Friday’s high (77.52), or seek to fade into retracements within Monday’s range while prices remain beneath the weekly pivot point.

Source: COMEX, TradingView

Gold (GC), Silver (SI) Futures Positioning | COT Report

While traders remain net-long gold and silver futures, positioning is low by historical standards and has been trending lower alongside prices. Net-long exposure also peaked well over a year ago. Notably, gross-short exposure to gold is rising among large speculators, while activity in silver suggests traders are gradually stepping away from the market.

If large speculators are correct in increasing bearish bets on gold, it could spell further downside for silver, which typically tracks the yellow metal.

Source: CFTC (COT), COMEX, LSEG

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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