Top Story

Gold/Silver Ratio Squares Up To Key Support

The gold/silver ratio has rolled over once more. Whilst we can see it headed for the mid-70’s, a few technical indications point towards a pause first.


In percentage terms, we had suggested it could reach the mid 70’s if we’re to see a similar retracement to the one seen in 2016, and momentum during this decline suggests it’s giving it a good go. The leg down from 89.85 is of similar velocity and depth the fall from 93.46, and both have been relatively straight lines to denote how silver has clearly had the edge. However, given technical levels on the ratio and silver, we suspect the ratio’s decline is due a pause before its next decline.

XAU/XAG has stalled at a bullish trendline generated from the March 2017 low, although it could be argued the more reliable trendline is the one generated from the July 2016 (at the end of its last, deep correction). Even so, volatility is beginning to subside which leaves the potential for the ratio to consolidate or (better still) retrace.

If the ratio falls further, there’s a decent zone of support around the 80.89-81.55 lows, which also coincides with the July 2016 trendline, and it’s possible we may see a more credible reaction there. However, a break beneath 80.89 suggests prices are on track to drop to the mid-70’s (and possibly further if the long-term chart is anything to go by).


Finishing up on silver, it’s reached out initial target and stalled around the 18.56 highs, after breaking out of a basing pattern. Whilst the reward to risk potential appears undesirable on the daily chart, around current levels, it does also points an increased likelihood gold may outperform silver over the near-tern, to allow the ratio to retrace. From here we’re looking for any consolidation (at a minimum) but also for prices to retrace, build a new higher and form a base, before getting overly bullish again.


Related analysis:
The Gold/Silver Ratio Could Pay Handsomely In Silver
Gold correction likely


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account