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(Kitco News) – Gold and silver are seeing solid technical selling pressure after gold tested resistance at $2,000 an ounce earlier in the week. However, technical analysts at Bank of America Securities said any decline could be viewed as a buying opportunity for both precious metals.
The gold market is currently attempting to hold support around $1,960 an ounce. But analysts at BofA aren’t too worried if this level breaks. In a report published on Tuesday, the bank said the precious metal remains on track to hit all-time highs as long as prices stay above the trend average of $1,888 an ounce.
“We believe the daily, weekly and monthly timeframes are still pointing to higher gold prices this year. As such, we favor long positions/buying dips near $1,940/$50 for tactical trades and when above $1,888/oz for intermediate term trades. Our measured move targets suggest $2,175/oz is still seen,” the analysts said.
Looking at the gold technical picture, analysts said that the precious metal is forming a bullish cup and handle pattern. In the short term, the price action is looking a bit exhausted. However, they added that they expect support between $1,940 and $1,950 an ounce.
Analysts added that the precious metals sector could be on the cusp of becoming one of the best-performing commodities of the year.
“Gold vs Copper and Gold vs Silver appear to be bottoming in favor of gold outperforming this summer. All you need is a break to the upside to confirm this. Gold vs. Bonds and Silver vs. Bonds break out to new highs suggesting precious metals Metals are favored over bonds,” the analysts said. “Silver vs. Oil and Silver vs. Copper look supported and may start to show bottom patterns pointing to silver outperforming in 2Q-4Q22.”
Looking at silver prices, BofA reiterated its call for prices to rise 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 must hold support at $24.80 while medium-term views must remain at $24.00/oz. A trendline in the upper $23 areas is the last resort,” analysts said in the report.
Although Bank of America remains bullish on gold and silver, analysts said there is a risk of the yellow metal forming a double top at a record high of $2,078 in 2021. However, they noted that the risks are still small.
“Gold would need to start selling off in the next 1-2 months, say below the last breakout point of $1,840 to consider the possibility of a double top and a major pullback,” the analysts said.
Although gold prices have room to maneuver against the US dollar, BofA said the precious metal is looking stretched against other currencies like the euro and Japanese yen.
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