(Kitco News) – Gold and silver are testing key support zones which, if definitively breached, could result in a broad capitulation in precious metals, according to Jesse Colombo, independent precious metals analyst and founder of the BubbleBubble Report.
Colombo said Friday’s price action is somewhat unusual, because it's not driven by a clear surge in the dollar.
“You also have Treasury yields falling, and bond yields overall falling,” he said. “Oil is up, so that could certainly be a factor, but it's not really up in such an extreme way, about 2% to 2.5%. It doesn't seem like the sell-off in gold is commensurate with the rise in oil.”
“There's definitely a technical element,” he said. “I suspect there's risk aversion heading into the midterms, and also there's liquidations in tech stocks.”
Colombo said there’s also trepidation that the U.S. administration may escalate the Iran conflict.
“I've even seen some speculation that there could be some action this weekend,” he said. “A lot of times President Trump likes to kick things off on the weekend, have a quick skirmish, and then wrap it up by Sunday evening before the futures open. It's possible that there's risk aversion ahead of this weekend, like ‘sell first, ask questions later.’”
Colombo warned that negative sentiment has resulted in a snowballing of downside momentum which could soon lead to a capitulation.
“It's taking out these key support levels,” he said. “For example, on COMEX gold futures, $3,900 to $4,000 was that floor of support that I've been watching, and that was formed exactly one year ago, in October and November, that support zone. It's testing that zone, but it has not broken below it yet.”
Colombo said he’ll also be watching Friday’s close and how the new week begins.
“Does it continue to hold this zone? We're really at a critical level,” he said. “If it does indeed close below on strong volume – possibly next week – then the next support I'm looking at is around $3,500.”
“I'm not saying it will go there. I'm just saying if this current support indeed fails, the next level to watch is $3,500.”
For silver, Colombo is keeping his eye on the 45-55 support zone in COMEX futures, which was also formed during the October-November highs and lows exactly one year ago.
“That was the last area where it was consolidating and bouncing around before that big parabolic run-up into late 2025, early 2026, so I want to see how it acts there,” he said. “Plus $50, which has played such a key role going back to 1980, roughly the peak of the 1970s secular bull market in silver and precious metals, and then 2011 as well.”
“In November 2025, silver shot above that, and I viewed that as a sign of a major multi-year breakout,” Colombo said. “Now we're approaching $50 from the upside, and now it's a new support – not literally $50, but a zone around there, because you know there’s going to be all sorts of shenanigans at that level. I want to see if it's going to hold; It can go a little bit below there, a quick flush. If it holds it, good. If it breaks below, we look to the next support. But for now, it's still holding that support, so that’s what I'm banking on at the moment.”
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