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(Kitco News) – The gold and silver are seeing some solid technical selling pressure after gold tested resistance at $2,000 an ounce at the start of the week. However, technical analysts at Bank of America Securities said that any dip in the price could be seen as a buying opportunity for both precious metals.
The gold market is currently trying to hold support at around $1,960 an ounce. But the analysts at BofA aren’t too worried if that level breaks. In a report published Tuesday, the bank said that the precious metal remains on course to record all-time highs as long as prices stay above the trending average at $1,888 an ounce.
“We think the daily, weekly and monthly timeframes still indicate higher gold prices this year. Therefore we like longs/buying dips near $1,940/50 for tactical trades and if above $1,888/oz for medium-term trades. Our measured move targets suggest $2,175 /oz can still be seen,” the analysts said.
Looking at gold’s technical picture, the analysts said that the precious metal is forming a bullish cup and handle pattern. In the near term, the price action looks a little exhausted. However, they added that they expect support to hold between $1,940 and $1,950 an ounce.
The analysts added that the precious metal sector could be on the cusp of being one of the best-performing commodities for the year.
“Gold vs. copper and gold vs. silver look like they are forming bottoms in favor of gold outperforming this summer. They just need one break higher to confirm. Gold vs. bonds and silver vs. bonds are breaking out to new highs suggesting precious metals are preferred, instead of bonds,” the analysts said. “Silver vs. oil and silver vs. copper look supported and may start to form bottom patterns to indicate silver outperformance in 2Q-4Q22.”
Looking at silver prices, BofA reiterated its call for prices to push to $30 an ounce this year. The bullish outlook comes as silver prices fall nearly 3% on the day, with May silver futures last trading at $35.39 an ounce.
“Tactical views need to hold support at $24.80 while medium-term views need to hold $24.00/oz. A trend line in upper $23s is a last resort,” the analysts said in the report.
Although Bank of America remains bullish on gold and silver, the analysts said that there is a risk that the yellow metal forms a double top at the 2021 record high of $2,078. However, they noted that risks are still low.
“Gold would need to start selling off in the next 1-2 months, such as below the last breakout point of $1,840, to entertain the possibility of a double top and large decline,” the analysts said.
Although gold prices have room to move against the US dollar, BofA said that the precious metal looks stretched against other currencies like the euro and the Japanese yen.
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