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Gold and silver prices have been experiencing notable upward momentum in October 2024, with gold hitting record highs and silver climbing to levels not seen in 12 years. This rise is happening despite the presence of typical market pressure from a stronger US dollar and higher interest rates, both factors that historically have tended to weigh on the performance of precious metals. Typically, a rising dollar makes commodities priced in dollars, such as gold and silver, more expensive for overseas buyers, which can reduce demand. Similarly, higher interest rates offer more attractive returns on interest-bearing assets and generally reduce the appeal of non-yielding assets like precious metals. However, this counterintuitive rally has underscored gold and silver’s role as a safe-haven asset, particularly in times of uncertainty and economic imbalance.
On Wednesday of this week, technical analysis signaled potential selling pressures for both gold and silver, as indicators like the MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) began to flash warning signs of overbought conditions. Despite these signals, market sentiment has remained bullish, likely driven by factors outside of the traditional scope, such as geopolitical risks and inflation concerns, which could be fueling safe-haven demand. Investors are questioning the reliability of these technical indicators in predicting future price movements, given the strong momentum that precious metals are currently enjoying.
Traders and analysts are paying attention to key support and resistance levels in the short term. For gold, a major resistance level looms near the $2,150 mark, which could open the door for further gains if broken. Support levels have been observed around $2,000, and any meaningful drop below this could trigger a more substantial correction. Similarly, silver faces resistance at the $28.50 zone, with immediate support closer to the $25 level. Breaking these critical price points could influence near-term trading behavior, so many are adopting cautious trading strategies to navigate the uncertainty.
With the broader economic environment strained by a mix of high inflation, ongoing geopolitical tensions, and central banks maintaining tight monetary policies, safe-haven assets like gold and silver are likely to remain in the spotlight. Investors are carefully weighing the potential for further upside versus the heightened risk of a near-term pullback, as technical signals are starting to point to a potential slowdown in momentum. The key question is whether the bullish drive will persist and test new highs or if the markets will soon revert to more traditional behavior patterns amid rising yields and a solid dollar.
