The rollercoaster ride continues as the volatile selling is not quite over yet. Precious metals looked on course for a modest recovery in the past few sessions before being dealt a slight setback in US trading the day before. Gold failed to hold a firm break above $5,000 while silver dipped back under $90 to start with in closing out yesterday.
That carried over to today before a heavy round of selling hit in Asia with silver falling from $89 to $74 in the span of less than two hours. From earlier:
- Silver takes a nosedive as dip buyers are dealt a setback
- Precious metals slammed, silver plummeted. Was it this news out of China?
For me, the selling reaffirms the technical picture we're seeing with precious metals still at the moment. That being dip buyers are still not able to seize back control. And that indicates that the volatile selling and swings are not quite over and done with just yet. So, be very careful when picking your battles.
The near-term chart for silver clearly exemplifies that with price action failing to firmly hold above the 38.2 Fib retracement level at $90.55 for one. The other key thing is that we're seeing a solid rejection of the 100-hour moving average (red line) as well. That keeps the near-term bias more bearish for the precious metal, at least for now.
The drop in gold isn't quite as pronounced, with it being down just around 1.5% on the day. But as mentioned before, any major pullbacks in this space will hurt silver more than it will gold. And that is precisely what we're witnessing now.
The correction will end when it ends. But in the meantime, expect the volatility to continue to play out as we likely establish a much larger consolidative range for both precious metals. It will require a trigger for dip buyers to gain confidence and to regain the momentum again. However, that will prove to be tough for the time being as profit-taking activity will be seen every so often in this kind of market turbulence.
