Gold and Silver Break Higher, but Pullback Risk Is Building

Gold (XAU) has already made a significant move. After breaking out of that wedge pattern, gold rallied roughly 10%, and now we’re starting to see it stall. We had a small down day, followed by a modest move higher, but price is still below the previous day’s high. I still see room for additional upside, but gold is approaching an important resistance level.

The key level I’m watching is around $4,500. There’s a longer-term trend line running through several important pivots on the chart. Gold broke above it, respected it multiple times, accelerated into a major rally that topped around $5,600, and eventually came back to test that same structure. That trend line now points toward roughly $4,500, so that’s where I’d become more cautious about chasing this move.

Longer term, the bullish outlook hasn’t changed. The base case remains $13,000 by roughly 2029 to 2031. That outlook takes into account M2 money supply expansion, inflation, real interest rates, United States debt cycles, and global debt. The more aggressive bullish scenario gets gold to roughly $17,000 to $18,000 over that same broad period, but that would require fiat currency conditions to deteriorate much faster than they already are.

What matters right now is what happens if gold hits resistance and starts to pull back.

The first support I’m watching is just below $4,200. A normal retracement into that area could be enough to set up another move higher. If $4,200 fails, the next important level is around $3,900.

Then there’s the deeper scenario around $3,500. That’s the worst-case bear scenario. If gold retraces all the way back toward the original breakout structure, that could potentially happen around September into October. Even a move that deep would not automatically mean the larger breakout has failed. Markets can break out, run higher, and then come all the way back to test the original breakout area before continuing.

That’s why I wouldn’t treat any one of these levels as the guaranteed bottom. Around $4,200, I’d be interested in starting small. If price reaches $3,900, that becomes another area to add. If we actually get $3,500, that becomes a much more significant opportunity for both a swing position and longer-term exposure.

Silver (XAG) is giving us a similar setup. It also broke above a downward-sloping trend line and has started struggling after the initial move higher. After a move like this, that kind of pause isn’t unusual. The bigger issue is that silver is now testing another established trend line that has acted as both support and resistance across several previous pivots.

If silver pulls back, the first level I’m watching is around $58. That’s where a starter position becomes interesting.

If $58 doesn’t hold, the next level is $54, which silver has already tested before. Below that, the deeper support area is around $50, or slightly below $50.

What makes that $50 area particularly interesting is the timing. If silver eventually retraces back there, it could happen around September into October. That lines up with the same general period where gold could reach its deeper downside scenario.

So both metals remain constructive over the longer term, but that doesn’t mean we should chase them after strong breakouts. Gold has resistance developing around $4,500, with support just below $4,200, around $3,900, and potentially $3,500. Silver has potential pullback areas around $58, $54, and $50.

The goal isn’t to predict one perfect bottom and go all in. It’s to know where the important levels are before price gets there, stay patient if the market pulls back, and let the price action tell us when it makes sense to add exposure.