By: Treasure Coast Bullion Group -



Gold prices are taking a short-term breather forming a bull flag pattern, which is a consolidation after a breakout. This pattern is a pause that generally refreshes higher, so expectations would be for prices to re-start their upward move testing resistance near a downward sloping trend line that connects the highs in July of 2016 to the highs in September of 2017 and comes in near 1,353. Support on gold prices is seen near the 10-day moving average which coincides with the most recent breakout point which equals the October highs near 1,305.



Gold Price Chart

































Momentum remains positive as the MACD (moving average convergence divergence) histogram which is a momentum indicator that measures accelerating and decelerating momentum by evaluating the differences in two moving averages, is printing in the black with an upward sloping trajectory which points to higher prices for the yellow metal.

The recent consolidation in prices action has lead to a reversal of the relative strength index. The relative strength index (RSI) broke out to fresh 3-month highs last week, but has since turned lower which reflects decelerating positive momentum. This action in the RSI confirms the bull flag pattern. The RSI is a momentum oscillator that measures accelerating and decelerating momentum as well as overbought and oversold levels. The RSI remains overbought territory as it has pierced through the 70 level, which could foreshadow a temporary correction in gold prices. The last two times gold prices were overbought, and the RSI declined back through the overbought trigger levels, prices corrected an average of 5%. This would generate an excellent opportunity to purchase gold coins or gold bars.

Silver Price Chart

































Silver prices are now also consolidating after testing resistance levels near $17.27. Silver is forming a bull flag pattern which is a pause that refreshes higher. The next level of target resistance for silver prices is a downward sloping trend line that is generated by connecting the highs in April 2017 to the highs in September 2017 and comes in near $17.75. Support on silver bullion prices is seen near the 10-day moving average at $16.97. Additional support is seen near the 50-day moving average at 16.65.

The 10-day moving average crossed above the 50-day moving average which shows that a short-term uptrend is now in place. Momentum is accelerating as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices. Like gold bar prices the RSI (relative strength index) moved above and then below the overbought trigger level of 70, which could foreshadow a short-term correction.

Spread Between Gold and Silver Chart





















































The spread between gold bar prices and silver bullion prices has declined nearly 6% since hitting a high of 80.17 in early December. The spread sliced through support near the 50-day moving average and is approaching target support and upward sloping trend line that comes in near 76. Look for silver prices to catch up to gold, and accelerate higher on a breakout (of silver prices) as the spread between gold and silver finds support. Negative momentum on the spread is decelerating, which is positive for silver relative to gold, as the MACD histogram prints in the red with an upward sloping trajectory.