Silver at critical levels: the technical chart signals dangers for buyers, silver's trend remains fragile

Huitong News, January 8 — During the U.S. session on Wednesday, January 7, both gold and silver prices declined, primarily due to profit-taking operations initiated by speculative position managers. The technical setup shows significant resistance near historical highs, a factor that prompted bullish investors to wait for clearer developments during the midweek. The February futures contract for gold settled at $4,467.2 per ounce, down $28.9; the March silver contract traded at $78.22 per ounce, contracting by $2.819.

Silver Trend and Daily Chart Warning Signs

The technical picture of the March contract on NYMEX (New York Mercantile Exchange - Comex) reveals concerning configurations for the bulls. The silver trend observed this week, especially considering the significant drop on Wednesday, may be forming an inverted double top pattern on the daily timeframe. The upcoming price movements will be crucial to validate or invalidate this bearish formation.

According to traditional technical analysis principles, when the price breaks below the intermediate low between two peaks, the double top pattern becomes a confirmed bearish signal. In the specific case of silver, this would mean the March futures contract falling below the critical threshold of $69.255 per ounce. At these lower price levels, a significant concentration of sell-stop orders from traders is likely to reside. Silver’s movement could then guide gold’s price action in subsequent sessions.

Price Movements and Technical Outlook

On the bullish side, the next target for March silver futures remains closing above the historical resistance at $82.67 per ounce. Conversely, bearish traders aim to break the important support at $69.225 per ounce (previous session low). In the short term, the first resistance is at $79.00, followed by $80.00; the nearest support is at $75.70, with an additional support level at $75.00.

Regarding February gold futures, the primary technical resistance coincides with the contract high of $4,584.00 per ounce. Shorts are targeting a technical break below the strong support at $4,200.00 per ounce. In the short term, immediate resistance is at $4,512.40 (yesterday’s high), while the next support level is at today’s low of $4,432.90.

Official Demand for Precious Metals Remains Supported

Despite recent volatility, the fundamentals support the precious metals complex. The Chinese People’s Bank has continued its accumulation cycle for the fourteenth consecutive month, indicating robust official demand even during record highs. Data released on Wednesday show an increase of 30,000 ounces in China’s central bank gold reserves in the previous month. Since the start of the November 2024 purchase cycle, Chinese monetary authorities have added approximately 1.35 million ounces of gold, equivalent to 42 tons.

Gold completed its best year since 1979, driven by the convergence of three factors: central bank acquisitions, geopolitical tensions, and wealth reallocation toward safe-haven assets. Even after the peaks reached last autumn, the yellow metal maintains structural strength.

Market Scenario: Other Relevant Quotes

The dollar index showed a slight strengthening; crude oil prices stand at $56.50; the 10-year U.S. Treasury yield is around 4.15%. These elements form the macro backdrop within which precious metals movements develop.

Overall, silver’s trend is the most sensitive barometer of upcoming volatility, while gold maintains a more stable trajectory supported by institutional demand. Traders will need to closely monitor technical tests of critical thresholds in the coming trading days.