(Kitco News) – Gold and silver are testing key support zones that, if definitively breached, could lead to 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 was somewhat unusual because it was not driven by a sharp rise in the dollar.
“There is also a decline in Treasury yields and an overall decline in bond yields,” he said. “Oil is up, so that could definitely be a factor, but it’s not really that extreme a rise, about 2% to 2.5%. It doesn’t seem like the selloff in gold is proportional to the rise in oil.”
“There’s definitely a technical element,” he said. “I suspect there will be risk aversion as we approach the midterms, as well as a sell-off in tech stocks.”
Colombo said there were also concerns that the US administration could escalate the Iranian conflict.
“I’ve even seen some speculation that there might be some action this weekend,” he said. “Often, President Trump likes to kick things off on the weekend, have a quick skirmish, and then wrap it up Sunday night before the futures open. It’s possible that there will be risk aversion leading up to that weekend, along the lines of ‘sell first, ask questions later.'”
Colombo warned that negative sentiment had snowballed into bearish momentum that could soon lead to capitulation.
“It removes those key levels of support,” he said. “For example, on COMEX gold futures, $3,900 to $4,000 was the support floor that I was seeing, and that was formed exactly a year ago, in October and November, this support zone. It’s testing that zone, but it hasn’t gone below that yet.”
Colombo said it would also monitor Friday’s close and the start of the new week.
“Is he continuing to hold this area? We are really at a critical level,” he said. “If it does indeed close below significant volume – perhaps next week – then the next support I see is around $3,500.”
“I’m not saying it will go to that level. I’m just saying that if current support does indeed fail, the next level to watch is $3,500.”
For silver, Colombo is keeping an eye on the 45-55 support zone in COMEX futures, which also formed during the October-November highs and lows exactly a year ago.
“That was the last area where it was consolidating and rebounding before this big parabolic surge through late 2025, early 2026, so I want to see how it acts there,” he said. “Plus $50, which has played a key role since 1980, roughly the peak of the 1970s secular bull market for silver and precious metals, and then in 2011 as well.”
“In November 2025, silver surpassed that number, and I took that as a sign of a major, multi-year breakthrough,” Colombo said. “Now we’re approaching $50 on the upside, and now it’s a new support – not literally $50, but an area 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; support, so that’s what I’m counting on at the moment.
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