- Gold and silver bullish momentum fading after failed upside breaks
- Crude strength reviving pressure through yields and the USD
- Gold testing $4787 support, silver leaning on $78
Rally Fatigue Meets Crude Strength
With risk assets looking fatigued after a breakneck rally over the past few weeks, and with reversal signals starting to trigger across FX and US rates markets in the wake of stubbornly high energy prices, precious metals appear vulnerable to a deeper unwind, threatening to break the uptrends that have been in place for weeks.
The key signal from the past week is that both gold and silver continue to trade with strong inverse relationships to US yields and the dollar, although that linkage has softened slightly from the extremes seen earlier. In contrast, the inverse relationship with energy prices has reasserted itself having dwindled in recent weeks.
For gold, the five-day correlation with US 10-year Treasury yields sits at -0.78, while the relationship with the US dollar index is -0.40. Both remain significant, but the standout move is Brent crude at -0.65 and natural gas at -0.56 after positive readings a week earlier.
Source: TradingView
Silver tells a similar story with even greater magnitude. Its five-day correlation with US 10-year yields is -0.76 and with the dollar index -0.48, but Brent sits at -0.81 and natural gas at -0.65, reinforcing silver’s higher-beta tendency relative to gold.
That suggests precious metals are still responding to traditional drivers such as yields and FX, but the more immediate influence right now is elevated energy prices prompting traders to trim exposure after an explosive rally higher.
If crude remains firm and broader risk appetite continues to cool, both gold and silver look vulnerable to a deeper unwind near term, with both metals testing downside levels as we approach the weekend.
Gold Struggling to Bounce
Source: TradingView
Gold has struggled above $4800 throughout this week, with two attempts to break resistance at $4860 on the 4H timeframe ending in failure, seeing the price slip back to $4787 where it has attracted bids over the past two days. However, the inability to generate a meaningful bounce from these levels hints bears may be slowly gaining the upper hand, putting the intersection of $4787 support and the April 2 uptrend in focus today.
A break beneath that zone would skew directional risks sideways to lower, fitting with the flattening recovery profile seen since the latter part of March. That would bring $4750 and $4700 into view, the latter having acted as both support and resistance for extended periods this month.
Right now, momentum signals are neutral, placing greater emphasis on the price rather than retaining a firm directional bias. RSI (14) is flatlining near the neutral 50 mark, while MACD has rolled over after crossing beneath the signal line and is edging towards negative territory.
Silver Rejected Repeatedly Above $80
Source: TradingView
Silver looks heavy after multiple failures above $80 earlier this week, with the price easing back to support at $78. Like gold, the lack of a meaningful bounce from this level hints directional risks may be starting to shift lower, even though the uptrend in place since March 21 remains intact.
RSI (14) has rolled over and now sits near neutral levels, while MACD has crossed beneath the signal line and continues to turn lower, a message that fits with the broader directional assessment. It is not outright bearish, but it is certainly not bullish, far from it.
Should downside risks materialise, the March uptrend will be in focus. A break of that would open the door for a deeper unwind towards $74.90, $73, or even $69.65 where the price bounced strongly on three occasions earlier in April.
