Gold and Silver Update 1/31/2011


Simple Moving Average( SMA ) 50-period (red), 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.

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Elliott Wave Principles
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Previous Post for Gold and Silver (1/28): Choppiness Increases Around Support Areas; Corrective Rally?

Gold (XAU/USD)
Gold 1/31/2011

- Gold is acting as anticipated from the previous gold update on Friday. Friday's high held, and the market is in a decline, that is now being supported above the 1323 , 61.8% retracement level.
- Another rally that breaks above the current resistance at the 1350 area, should create a reverse head and shoulder.
- Still the rally has resistance near 1361 , which is a swing projection, and also the 61.8% retracement area.
- The count is that this is a corrective rally, but if global uncertainty returns, gold can return for another bull run.
- This is premature, so let's see what happens to this possible c wave up. If the market accelerates, then a decline fails to break below 1350 , we are either in very significant correction rally, or the bulls could have taken over. The first upside target above 1361 is 1380 .
- There is also the scenario, where the market declines below 1309 without extending the current correction higher. The intermediate term targets below that are 1292 and 1265 .

Silver (XAU/USD)
Silver 1/31/2011

- Silver had trouble breaking the 161.8% expansion, 38.2% retracement and 2SMA in 4H chart. This resistance cluster at 28.40 was respected and the market followed with a decline.
- The decline is supported above 27.50 , and the moving averages in the 1H chart.
- There is still a bullish bias to this pair in the very short-term.
- If the 28.40 level is broken, we might have a rally to 28.75 , the 50% retracement and SMA200 in the 4H chart.
- Above 28.75 , we have the 29.40 , the 618% retracement level.
- Most likely this is a corrective rally. If the market is to turn bullish, the current resistance at 28.40 , should eventually become support to develop a base and to follow Elliott Wave Principles.

Will gold and silver continue lower after the current correction? We would love to know what you think.
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Fan Yang CMT
Chief Technical Strategist


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Commodities

Referenced Stocks: SMA

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