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Yamada - Here Are The Key Levels To Watch On Gold & Silver

With gold trading close to the $1,700 level, and silver near $33, today King World News is pleased to share a piece of legendary technical analyst Louise Yamada’s “Technical Perspectives” report. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.

Metals: Gold & Silver

By Louise Yamada Technical Research Advisors, LLC ("LYA")

December 5 (King World News) - Gold spot price (GOLDS-1,714.80) carried little immediate effect regarding a pick up in demand when the margin requirement for the gold futures was lowered mid month. Recent behavior has been unusual in that the dollar and gold have both withdrawn in price (they usually perform inversely). Gold appears weak (see Figure 10) and may need to extend the ongoing consolidation.

The weekly momentum is turning negative (see arrow) along with the daily, and the monthly (neither shown) remains negative and deteriorating. With all three momentum readings negative, the path of least resistance appears down, suggesting price may decline further within the current consolidation and even test supports.

From a symmetry perspective, and assuming the consolidation holds to carry an ultimate upside resolution, there may need to be further consolidation to the right of the 2012 lows, equivalent to that on the left of the low (see saucer below). That would carry an extended consolidation through the first quarter of 2013 before price finally might rise to address the 1,800 level with enough strength to penetrate.

Support currently lies at the 40-week MA, 1,670, with 1,600-1,526 remaining the major critical support, were the negative momentum influence to cause further weakness. Were supports to break, 1,500 and 1,400 would return to the risk profile. One-year resistance is unchanged at the 1,800 level, with near-term resistance at 1,750.

Silver: Still Neutral … But.

Silver spot price (SILV-33.41) carries a similar pattern to Gold with the 40-week MA right at price support of 31, with the 2008 uptrend at 30, and the year-long resistance still at 35, as depicted herein last month. However, the weekly momentum is still positive but precariously flat; the monthly is still negative and also flattening. There is a symmetry pattern similar to Gold again suggesting further consolidation may be necessary if price can’t move through resistance at 35 over the near term. Critical support remains at 27-25.

KWN note: It’s a fascinating chart above where Louise noted the “saucer.” What she is suggesting here is that it is possible gold may need a bit more time to consolidate. This may create or require symmetry between the left and right hand side of the saucer. Regardless, the longer gold builds a base here, the bigger the ultimate move will be.

As Managing Director and Head of Technical Research for Smith Barney, Louise was a perennial leader in the Institutional Investor poll, and was the top-ranked market technician in 2001, 2002, 2003 and 2004, before going independent. To subscribe to Louise Yamada Technical Research Advisors, LLC ("LYA") CLICK HERE.

Eric King

KingWorldNews.com

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