Gold and silver markets are signaling a bearish outlook as both metals formed bearish engulfing patterns on their March monthly candlesticks, according to Heraeus precious metals analysts. This pattern, which indicates a potential downturn, coincides with recent geopolitical tensions involving the U.S. and Israel. Analysts suggest that the precious metals market may need several months of consolidation before a bull market can resume.
Gold's last similar pattern in April 2022 led to a significant price drop from $2,000 to $1,600 per ounce over six months. The current key support level is near March's low of $4,100 per ounce. Despite this, rising inflation and declining real interest rates are expected to support gold demand. Central banks continue to purchase gold, with a net increase of 27 tons in February, led by Poland's 20.2-ton acquisition.
In the silver market, sales of silver bars and coins from the Perth Mint fell to 976,000 ounces in March, down from nearly 2 million ounces in February. U.S. Silver Eagle coin sales also decreased slightly. However, first-quarter sales exceeded 8.1 million ounces, up from 5.3 million ounces last year.
Gold and Silver Show Bearish Patterns, Recovery May Take Months
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