A testing second for the valuable metals restoration on the charts

Amid all the volatility in markets, precious metals continue to be among those being closely watched still. Both gold and silver are showing lively signs of a better recovery to start the new week, trading higher so far today. But after a setback last week, it’s best to be reminded that we’re still caught in the phase of some heavy volatility spikes/swings for precious metals.

Silver is the standout today, trading roughly 5% higher to above $81 currently. The near-term chart points to quite a critical test as we approach the key near-term level that halted the bounce last week and triggered the heavy selling.

The flush last week saw silver dive to near its 100-day moving average before bouncing. That’s a solid support line if any, allowing for dip buyers to come in. And now, they continue to try and push the agenda in contesting back the 100-hour moving average (red line) on the near-term chart above.

That was the key level that coincided with the trigger for another round of heavy selling last week. But for now, we’re not seeing as volatile and as dicey price action as what we saw last week.

That will give dip buyers some confidence if they can hold above the key near-term level, seen at $81.36 currently. A break of that frees up scope to try and negotiate a continued recovery towards the $92 level – where the 200-hour moving average (blue line) holds nearby.

It’s baby steps for precious metals at this point, so it is all about taking things one technical point at a time in gauging the recovery mood.

As for gold, it is pretty much setting up for a repeat of last week’s price action.

Dip buyers are looking to establish a more bullish near-term foothold, now testing waters above the $5,000 mark and the 200-hour moving average (blue line) as well. But as seen last week, there are offers layered closer to $5,100 and that will again be a key spot to watch on any push higher this week.

The gold bulls will have to clear that and also establish a firm daily break above the 50.0 Fib retracement level of $5,002 to really convince of a more solid bounce.

But as mentioned before, all of this doesn’t mean that we are set up and poised to return to fresh record highs immediately after. It could still happen, with the right trigger points of course. However, I reckon we are likely to be stuck in a more volatile and wider consolidative phase for precious metals after the sharp pullback and profit-taking activity. At least just for a little bit.