In our daily prices alerts we’ve been tracking a possible breakout in gold in NZ dollars.
Today we’ll have a look at how likely a gold breakout is, along with a look at silver in NZ dollars, and the New Zealand Dollar chart too.
Gold in New Zealand Dollars Breaking Out?
While NZD gold has been trending higher overall since 2014, it has been unable to make new highs since 2016.
But now gold in New Zealand Dollars is currently poised just above the trend line from 2016.
It’s a little too early to call this a conclusive breakout. But if NZD gold can edge a little higher over the next few days, then we should be safe to call it a breakout.
Buying on a breakout can be a good move. Especially when there has been a lot of consolidation, as there has in the lead up to this one. Because the move that follows can often be hefty.
How High Might NZD Gold Go From Here?
Once we see a clear and definite breakout above $1900, then we need to watch for the next level above this at $1950. This is the high from 2016 and once broken there is a lot of blue sky ahead.
We could then expect to see gold push on all the way to $2200. As there is no major overhead resistance between $1950 and $2200. This is also where the uptrend line currently extends to.
Above this is the all time high of $2350, so there remains plenty of upside ahead yet for gold. But with NZD gold close to overbought, the odds favour another pullback in the near term.
NZD Silver Also Close to a Break Out
Silver in New Zealand dollars is also close to a break out.
Having shot higher back in 2016, NZD silver has since been in a downtrend. Making lower highs for the past 2 years.
But NZD silver is also in a large multi-year wedge formation. Meaning the silver price has been bouncing between an overhead downtrend line and a rising trendline (red lines in the chart below).
Silver has faked a breakout from this pattern on more than one occasion. But before too long it will have to break out of it.
This wedge formation means silver is building like a giant coiled spring. So when this breakout happens it will possibly be quite significant.
But in the meantime most people are probably losing patience with silver.
When Will the Silver Breakout Happen?
Well it could be happening right now in NZ Dollar terms. After a multi-month consolidation just above the $22 level, NZD silver has moved sharply higher over the past month. It could well move higher still from here.
Although silver is getting close to overbought on the RSI indicator. So we could see silver move back down again, as it has done on previous occasions after touching the downtrend line. There is still room left within the wedge for another pull back to the $22 region or just below.
However, this wedge formation can only carry on for so long. The breakout can’t be too many months away.
A Weakening New Zealand Dollar Could Aid a Gold and Silver Breakout
The New Zealand dollar has fallen sharply over the past month. From 0.735 down to just above 0.69 today.
Interestingly the Kiwi dollar is also in a giant multi year wedge formation. However, unlike gold and silver, the Kiwi is sitting on the uptrend line and threatening to head lower.
There is data to support the NZ dollar weakening further in the long term. See: Deutsche Bank: New Zealand Dollar the Most Expensive of Major Currencies, for more on that.
For now though the NZ dollar is oversold, so a short term bounce higher looks more likely.
But if the Kiwi weakens in the long run this will be supportive of NZD gold and silver prices. A further fall in the Kiwi could also aid in the breakout of gold and silver.
(If you’re unsure about any of the terminology we use in analysing these charts, check out this article: Gold and Silver Technical Analysis: The Ultimate Beginners Guide.)
Should You Buy Gold Now or Wait and See if a Break Out Happens?
If you can’t decide what to do, then maybe you should read this: