Silver Flashes Warning Signals as Gold Price Retreat Intensifies Technical Pressure

Gold and silver markets took a step back on Wednesday, January 7th, with sellers dominating during midday US trading hours. The retreat was driven primarily by profit-taking among futures speculators, while formidable technical barriers stationed above current levels prompted bulls to exercise greater caution. February gold futures settled at $4,467.2 per ounce—a drop of $28.9—while March silver contracts closed at $78.22 per ounce, down $2.819.

The Technical Red Flag: Silver’s Double-Top Pattern Takes Shape

Silver’s price action this week, particularly Wednesday’s steep decline, is crystallizing into a potentially dangerous chart formation. The daily chart of March COMEX silver futures is showing signs of a bearish double-top reversal pattern—a setup that typically precedes significant downside moves. Market observers suggest this pattern will be validated if silver breaches a critical threshold: should March futures dip below $69.255 per ounce, the bearish reversal would be confirmed, likely triggering a cascade of stop-loss orders clustered below that level.

For bulls to regain confidence, silver needs to close decisively above its record high of $82.67 per ounce. Meanwhile, bears are eyeing a close below last week’s low of $69.225 per ounce as their near-term objective. In the immediate term, resistance clusters at $79.00 and $80.00, while support anchors are positioned at $75.70 and $75.00.

Gold’s Technical Terrain Remains Contested

February gold futures face their own technical crossroads. Bulls need to push above the contract high of $4,584.00 per ounce to establish fresh momentum; bears, conversely, are targeting a breakdown below the $4,200.00 ounce support level. First resistance appears at overnight highs of $4,512.40, with secondary resistance at $4,550.00. Initial support sits at today’s low of $4,432.90, trailed by the $4,400.00 level.

Central Bank Demand Provides Fundamental Underpinning

Despite the technical headwinds, underlying fundamentals remain constructive. The People’s Bank of China has now increased its gold reserves for 14 consecutive months, underscoring sustained official appetite even as prices have climbed to all-time peaks. According to data released mid-week, China’s central bank added 30,000 ounces last month. Since the current accumulation phase began in November 2024, the PBOC has amassed approximately 1.35 million ounces—equivalent to 42 metric tons of gold.

This relentless central bank accumulation, combined with geopolitical tensions and investors’ shift toward alternative stores of value, enabled gold to achieve its strongest annual performance since 1979, despite recent volatility following the surge to record highs in autumn.

Broader Market Context

The broader financial landscape shows mixed signals: the US dollar index has edged higher, crude oil prices have retreated to approximately $56.50 per barrel, and the benchmark 10-year US Treasury yield stands near 4.15%.

Silver’s daily price direction will likely serve as the leading indicator for the precious metals complex this week, making close attention to technical support and resistance levels essential for positioned traders.