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Gold and Silver Prices Decline, Precious Metals Face Weakness

Gold and silver prices

Gold and silver prices weaken as US Treasury yields rise and the dollar strengthens; traders await a crucial price breakout.

Gold and silver markets experienced a significant price decline on Monday, with XAU/USD and XAG/USD weakening in response to rising longer-term US Treasury yields and a strengthened US Dollar. As traders seek to understand the near-term technical landscape for these precious metals, here is a detailed analysis of their recent performance.

Gold and Silver Prices Decline – XAU/USD Analysis

Gold prices continue to exhibit a need for a more precise direction in the near term. Prices consolidate within a narrow range, caught between the descending trendline from July and the ascending support line from February. The XAU/USD pair has maintained a relatively stable position since mid-2020.

The current state of consolidation implies that a significant price movement is imminent. Market observers are closely monitoring key levels to gauge the potential breakout direction. To the downside, the August low at 1884.89 remains a critical support level, while to the upside, resistance is likely to be encountered at the 23.6% Fibonacci retracement level, situated at 1971.63.

The data indicates a bearish sentiment in the gold markets, with traders notably increasing short positions. The bearish sentiment in the gold markets underscores the importance of the impending breakout, as it could set the tone for future price action in the gold market.

XAG/USD Analysis

Silver markets are mirroring a similar consolidation pattern to gold. XAG/USD is trading within a range of rising support and resistance levels. However, unlike gold, there appears to be more room for sideways price movement in the silver market, suggesting that XAG/USD could remain directionless for an extended period.

Monday’s decline in silver prices brought the metal to the midpoint of the Fibonacci retracement level, at 23.02, while positioning it just above the ascending support line established towards the end of the previous year. A decisive breakout could entail a breach of the 61.8% Fibonacci retracement level at 22.29, opening the door to a potential target at the 78.6% retracement level at 21.24.

On the other hand, if silver prices rally, the 38.2% retracement level at 23.75 becomes a significant resistance to overcome. Just above this level lies a descending resistance zone that has been in place since May.

In conclusion, gold and silver are at crucial junctures in their near-term technical landscapes, with traders eagerly awaiting the breakout direction to ascertain the future trajectory of these precious metals. The market sentiment suggests a degree of bearishness, but the impending price action will be pivotal in determining the next moves for gold and silver.

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