Sunday, November 8, 2009

Gold is leading & Silver following

There is a market talk on the decoupling in USD and Commodities trends. I'd like to make an inquiry in this field. Here are the Weekly trends in Silver and Gold.

My first observation is that Gold is in solid breakout mode and Silver is following a bit shy. I have read some time ago that analysts prognosticated a bigger rally in Silver actually for a number of fundamental reasons like decline in production capacity, industrial demand and so on. Well technically it obviously lacks the conviction that Gold is manifesting. Here is a detailed view:

Gold closed at an All-time high the week before US Senate is voting for the Health-care plan. A sign of inflation scare coming from the rise in government expenditures and DEBT?
Technically its 5-th straight week above 2008 high ($1033). Trendline Support is working perfectly and the Resistance projection is giving notional target around $1160. We have a rising 50-Week MA and RSI trending higher above 70 line. ADX reading is rising to 20.91 - not far from the critical 25 level of sustainable Trend Strength.

Silver - at the same time is still caught in the 16 - 18 range. It has solid Resistance to overcome - the 2008 tops ($19.50 and $21.40). The case for uptrend continuation is supported by the 50 / 200-Week MA Golden Cross and the rising RSI while ADX trend indication is not as bullish as we can witness in Gold at the same time.

Lastly while Gold's last week is a bold breakout move - Silver's last week candle is a typical Harami or Inside Week pattern which calls for indecision. As great traders say buy the strongest performers - which in the case means that we can see a hard evidence of solid momentum in Gold but same lacks in Silver.

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