Hello and welcome to CantosCharts. I'm Hemal Darjee, trader at Fat Prophets.

Today in our second instalment we're going to be looking at the price action of gold. Gold's recent rise has been fairly topical with investors moving out of the equity market and piling into safe havens such as gold in addition to the Swiss franc. However, we're going to be looking at the former as of today.

Looking at the weekly chart to begin with we can see that the recent rise since 2006 has been very strong. But more recently, we've reached a new all-time high of $1,840, so the question really remains is, can the yellow metal continue to push higher over the coming weeks and months to the all important $2,000 mark or ultimately, are gold prices going to take a pause for consolidation?

For those of you who've actually watched our analysis last month, we were looking at gold to break out to the upside out of this consolidation pattern. Now we've seen the gold firmly break out of that and more importantly, continue to push on higher and higher.

What we can actually see also on the lower pane is a moving indicator which is showing us the strength of the overall trend.

Now, the ADX line, which is the green line, is currently giving us some very strong readings currently with levels trading at about 49 at the moment. Typically, anything above 40 suggests that the trend is very strong and often, after that, a reversal actually proceeds.

So we would anticipate further gains in the near term a little bit hard to come by, so we're just going to continue watch this market over the coming days.

Something that has actually caught our eye is the other precious metal. Now that is silver. So evident on the daily chart, we can see that in May we had a very sharp decline to the downside and since May, over the past four months or so we've continued to just push on higher, albeit in a slightly choppy fashion.

What we've also labelled on here is an Elliott wave analysis where we've had a five wave decline to the downside with a correction labelled from A through to C.

What we've also done here is we've just overlapped and superimposed a daily wave chart just to take some of the noise out of the market and see what the overall swings from the highs to the lows actually are.

So when looking at this chart we can see that the daily wave firmly sort of confirms our analysis and going forward from here, we'd actually expect the broader sort of trend to continue. Now in this case, we'd expect the trend to push on lower from here and we sort of view this purely as a corrective move to the upside.

Now, generally, we sort of look for corrective moves to complete between the 50% to 61.8% region and we can see that silver prices certainly did that in the early part of August.

So going forward, we're sort of anticipating another leg to the downside, but the question really remains is where does momentum currently stand. On the lower pane we've actually included an RSI indicator, which is a relative strength indicator, and currently we're getting some bearish divergence on this where simply what this means is prices have formed a higher high, whereas the lower indicators formed a higher low.

So it's suggesting that upper momentum is easing and sellers are coming back into the market once again.

From a broader standpoint on the weekly chart we can see that a flag pattern has actually emerged following a pretty strong rise from 2010, but once again, by measuring the impulse of the rally from 2010, the 50% to 61.8% region falls in line with about $33 and $29 per troy ounce. So any sort of break below out of this bearish flag, we'd expect prices to push on lower over the coming weeks and months.

This has been CantosCharts. I'm Hemal Darjee and thank you for joining us on this second instalment.