Louise Yamada - Gold & Silver Closing in on Bullish Breakouts

With gold breaking above $1,750 level and silver over $34, today King World News is pleased to share with readers a piece of legendary technical analyst Louise Yamada’s “Technical Perspectives” report. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.

January 9 (King World News) - Gold spot price (GOLDS-1,739.07) spent the last five months tracing out a corrective trend (inversely to the U.S. dollar rally), which effectively has now held both the 2008 uptrend (touched at 1,545) and above the 1,600 support level (see Figure 13).  The Fed’s still accommodative news to keep rates low (maintaining negative interest rates) caused a strong lift in Gold (some short covering?) which penetrated the downtrend line in place from the September 2011 peak.  The breakout may resolve the corrective trend, or at least allow for a test of overhead resistance at 1,746 and 1,800, the point of the September 2011 price breakdown.

Daily momentum models are positive and the weekly (neither shown) are neutral but close to turning positive.  There may well be interim pullbacks, but Gold looks more stable and could maintain near- term price moves between 1,700 and 1,800 as a secondary portion of the repair process, before attempting to vault the prior closing high at 1,898.

From a longer-term perspective, there is an interesting correlation between the price of Gold and the U.S. Debt Limit progression (see Figure 14).  Given that there is another upcoming debate on further raising the limit, there appears a strong relationship to that of the direction of Gold, and another piece of evidence supporting the longer-term bull market for Gold.

Silver - Consolidating

Silver spot price’s (SILV-33.92) initial high near 50 occurred in April 2011 (see Figure 15), and the metal has been in a corrective mode ever since, but has managed to hold above both the key support at 25 and the 2008 uptrend line.  The response to the Fed’s still accommodative stance carried less of a punch for Silver, but the August 2011 downtrend line has been slightly breached as price addresses the nine-month resistance from 33-35, and the declining 200-day MA.  Further consolidation above 30 might be anticipated before a push through 35 may be forthcoming.  Thereafter, the next resistance / target comes in at 40.  Supports now at 30 and 25.

Louise Yamada

Copyright 2012 Louise Yamada Technical Research Advisors, LLC. All rights reserved.

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