As my colleague Matt wrote last week, the gold/silver ratio currently favors silver.  With negative yields around the world and the threat of the FOMC cutting rates again in September, precious metals have been in vogue as of late.  Let’s take a look at some shorter-term action over the last couple of months.

Looking at gold, the yellow metal has been moving higher since the end of May and has slammed right up against horizonal resistance at 1588, dating back to April 2013.  Gold currently is in a rising wedge with a divergent RSI.  This formation makes it ripe for a possible pullback as far down as 1406.  The target for a breakdown of a rising wedge is 100% of the wedge.

Where has silver been during the run up in gold?  Silver didn’t begin moving up in earnest until mid-July, at which point it began to outperform gold.  Currently, silver is trading near 18.18, up over 3.0% on the day and up over 9% in the last 3 days!  Silver is heading into trendline resistance and the RSI is in overbought conditions.  Silver, like gold, also looks ready for a pullback with first support at the bottom trendline, near 17.75.

As silver began to outpace gold in July, the gold/sliver ratio began to roll over.  The ratio put in a high near 93.45 and traded off into the end of July to 85.60.  It then bounced 50% of the move from the mid July high to the end of July low.  The high on August 5th was 89.84.  This set up an almost perfect AB=CD pattern, where the length of A to B should equal the length of C to D.

Although price never moves in a straight line, if that is the case here, it would suggest a target of 81.75 in the gold/silver ratio.  This would mean continued out performance of silver over gold in the short-term.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD tension remains elevated ahead of the Fed

EUR/USD is trading above 1.1050, in a narrow range ahead of the all-important Fed decision. Chair Powell is set to cut rates but signal no further stimulus is on the cards.

EUR/USD News

GBP/USD extends its falls to 1.2450 amid weak UK inflation, Brexit impasse

GBP/USD has dropped to around 1.2450 as UK headline CPI missed with 1.7% in August. Brexit negotiations remain stuck according to Chief EU negotiator Barnier. The Fed decision is eyed.

GBP/USD News

USD/JPY holds on to recovery gains above 108.00 ahead of Fed

Not only upbeat trade numbers from Japan but upbeat trade/political headlines also help the USD/JPY pair to remain firm around 108.20 prior to Wednesday’s European session. Focus on FOMC decision.

USD/JPY News

Forex Today: Fed set to trigger high volatility, oil falls, altcoins advance

Tension is mounting ahead of the Federal Reserve decision later today. Economists expect a 25 basis point rate cut amid slowing global growth and investment. 

Read more

Gold seesaws around $1,500 with all eyes on FOMC

With the global traders on a wait and see approach ahead of the key event, Gold offers fewer moves while taking rounds to $1,500 during Wednesday’s Asian session. Also supporting the bulls were positive statistics from the US and the Eurozone.

Gold News

Forex Majors

Cryptocurrencies

Signatures