After major supply knocked off the precious metals on a sideways trend, gold prices have been oscillating, with no clear direction. Silver on the other hand, has been slightly weaker, with a defined downtrend.
Gold Daily Chart Analysis
The most visible supply bar was the wide red bar by the end of June. The rally then continued on low volume, and more supply seen by VSA signals and weak congestion bars had been appearing.
A selling zone (congestion zone) was formed from the highs at $1370, and prices have repeatedly failed to break it, which along with the low volume in these rallies, suggests an overall lack of demand.
In gold, the $1301.5 level marks the distribution range low, and so its break would give a short opportunity in a lower timeframe such as 4-hours or hourly. A rally to the downtrend on low volume could provide another opportunity to sell.
Silver Daily
Silver is in a similar phase to gold’s, albeit its downtrend is clearer. An up trendline was just broken, and so, it’s good to check a lower timeframe to see the recent action in more detail.
Prices are now approaching a congestion zone, and a breakout would give a short opportunity. In the daily timeframe, a pullback to the trendline could provide another opportunity to short.
In the daily and H4 timeframes we’ve spotted a distribution phase which can give short opportunities when there is a breakout confirmation. Until the market tells otherwise, I maintain a bearish outlook on the mid-term for precious metals.