Precious metals delivered a strong session on Wednesday, with gold and silver futures both posting solid gains even as their underlying technical pictures continued to diverge. Gold futures gained a respectable $47, or 1.07%, on the day, closing at $4,447. In doing so, gold moved back above several areas of potential support and resistance, including the 100-day moving average and the 23.6% Fibonacci retracement measured from the all-time high at $4,755 down to the recent low near $4,000. Gold has also managed to hold its price above the cloud when overlaying an Ichimoku study atop our daily candlestick chart. Should it continue to move higher our next real target to overcome is at $4,474.
Silver futures turned in an even more impressive performance, gaining $1.54, or 2.34%, to close at $67.27 on Wednesday. However, silver was unable to close above its own 100-day moving average, and at the time of writing had begun Thursday’s overseas session trading just below that average.
Silver did manage to break and close above its Ichimoku cloud for the first time since August 7th, and is now attempting to overtake the conversion line, a moving-average-based price line that often acts as support or resistance. Using the default setting of nine periods, the conversion line is calculated as the average of the period’s highest high and lowest low: Conversion Line = (Period High + Period Low) ÷ 2, with nine sessions serving as the default setting. This represents the last significant resistance level within the Ichimoku cloud study. For comparison, gold’s own conversion line sits far above current pricing, at $4,500.
Silver futures, meanwhile, currently sit about $3.50, or 5%, below their own 23.6% retracement, measured from the all-time high at $120 down to the recent low at $54.70. What we can glean from comparing the two markets using these studies is that gold has recovered a greater share of the ground lost since its record highs than silver has. However, according to our Ichimoku study, silver has staged a swifter recovery, with a more pronounced V-shaped pivot. Gold has gained 10% over the last 55 days, while silver has more than doubled that pace, adding 23% in value over the same period.
Over that same 55-day span, the gold/silver ratio has declined by nearly 10%, falling from a high of 72.55 on July 17th to 65.37 currently, a decline of 1.25% today alone. This confirms that silver has indeed been playing catch-up, and the ratio’s steady decline suggests that trend may be nearing an important technical juncture. Support in the ratio could arrive just under the current value of 65.37, at 65.13. Should that level fail to hold, the next area of technical support comes in at 62.82, with the potential for a much deeper decline should conditions align, as the ratio bottomed at around 43 as recently as this past January.
Taken together, Wednesday’s price action reinforces a familiar theme this cycle: gold continues to lead the advance in outright terms, while silver’s technical structure points to a market working to close the gap. The next several sessions — particularly how silver behaves around its conversion line and its 100-day moving average — should offer further clues as to whether that catch-up trade still has room to run.
Wishing you, as always, good trading.
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