Gold and silver have been largely out of favour since the end of the first week of September. The dollar selling paused and US equity indices hit repeated new all-time highs despite raised geopolitical tensions stemming from North Korea. But precious metals could be on the verge of a comeback ahead of key central bank decisions from the Bank of Japan and US Federal Reserve, and as they test key technical levels. If these central banks turn out to be more dovish than expected then this may boost the appeal of the noninterest-bearing assets while a likely weaker US dollar would provide additional support for the buck-denominated metals. Conversely, if the Fed in particular turns out to be more hawkish than anticipated then precious metals may extend their falls further. Out of the two metals, silver looks the more interesting one from the technical standpoint. It has reached a key support area between $16.90 and $17.10. This area was formerly resistance and is where both the 50- and 200-day moving averages come into play. If this area now holds as support, we could see the resumption of the bullish trend that started after the metal flash crashed below $15.65 in early July. Otherwise a deeper pullback could be on the cards. But given the overall bullish structure of price action, we are now on the lookout for bullish patterns to emerge at these levels.

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DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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