China’s central bank is back in action, cutting interest rates and lowering reserve requirements to boost its economy. Well, guess what? Metals are feeling it, big time. Gold prices hit a record high, and copper and silver prices saw huge surges due to high demand.
As a trader scanning the market for opportunities, you’re probably wondering how these metals are trending and if there are any clear signs they’re still worth buying—or if the ship has already sailed.
We can’t know exactly what short-term and long-term are doing with regard to these metals. Still, we can gauge their sentiment using a technical analysis proxy: the Guppy Multiple Moving Average. In short, there are two ribbon MA groups in this indicator:
We will use a corresponding ETF as the proxy for each metal.
Let’s bring up this daily 6-month chart of GLD (you can also click the chart image below).
GLD is in record-high territory, and its next move will depend on a mix of global economic and geopolitical trends (meaning it’s anyone’s guess). But the GMMA technicals provide a narrative to follow:
As gold prices continue to soar, silver presents a slightly different picture. Let’s shift to a 9-month daily chart of our silver proxy, iShares Silver Trust (SLV).
With resistance at around $29.60 (see blue dotted line), SLV looks a little “toppy ” while hinting at a bullish breakout.
So, basically, it’s a wait-and-see moment for the white metal. But if it does break out, expect resistance (and possible price targets at the following highs), as shown in the monthly chart below.
Expect resistance at:
Looking at the daily chart below, there was a breakout above $28.80. The question is whether it will follow through.
The CMF shows a strong and continuing surge in buying pressure. The RSI just dipped from the 70 line, not quite in overbought territory.
Looking at the GMMA ribbons, note the suddenness and strength of the short-term ribbon against a “compressed” long-term ribbon. Besides indicating bullishness, what’s remarkable is the speed at which shorter-term traders piled in, pushing prices higher to the current breakout.
Given the momentum fueling the current surge, a follow-through is likely, with the next level of resistance at its all-time high of $31.63. If you entered (or are looking to enter) a long position, look to the bottom of the long-term ribbon to set a stop loss.
As China’s latest stimulus shakes up the metals market, keep an eye on sentiment (via GMMA proxy) to gauge which metal may be surging ahead or losing steam. Gold prices look like they might surge ahead, perhaps after a breather. Silver’s price is at a crossroads, while copper is hinting at more upside, possibly reaching, if not challenging, its all-time high. It’s worth adding the three charts discussed in this article to your ChartLists.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.