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Louise Yamada - Critical Levels to Watch on Gold & Silver

With gold and silver still consolidating longer-term gains, today King World News interviewed legendary technical analyst Louise Yamada to see where things are heading from here. When asked about the recent action in the gold market Yamada responded, “On the initial pullback, gold held above $1,700 and I think that’s important. I would like to see gold continue to consolidate here, it would be healthy if it would just do some backing and filling. I think this is healthy action, but I want gold to continue to hold above those lows. I would not like to see us have a rollover at this point that goes below $1,750.”

Louise Yamada continues:

“So $1,750 needs to hold for the consolidation and that is where the short-term uptrend comes into place. The recent decline stopped right on the short-term uptrend. The gold market needed to come off in order to have a sustainable acceleration. What I’m saying is that the initial pullback was essential to slowdown the accelerated advance.

The fact that the decline stopped right at the short-term uptrend is a plus, and if that short-term uptrend, which now comes in around $1,750 continues to hold, that would be another positive.

In the event that we were to break below the $1,700 to 1,750 level, think about the advance from the 2009 breakout to the recent high of roughly $1,900, that represented a 96% advance....

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“So if you were to have a 38.2% Fibonacci retracement, gold could pullback to $1,561, but only if the recent lows were taken out on the downside.

But the bottom line is that I think we need to go sideways for a period of time before we think about rushing off to the next target. During that brief resting phase, the trading range for gold could be roughly $1,725 to $1,850.”

When asked about silver specifically Yamada responded, “Silver has been hugging the trendline on declines, but we don’t want to see silver break $38. Could silver come back to $35? Sure, but I would like to see silver hold $38 while it finishes consolidating. You have to remember that the 200 day moving average for silver comes in around $35 for silver.

Let me add one final comment regarding the mining shares or the HUI index. You really need to see the HUI clear the 610 level on good volume in order to have a true breakout on the mining shares, until then it is just noise as the index trades near the 600 level.”

Eric King

KingWorldNews.com

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