Of late, the gold market has been following the trends in Japanese/US dollar rates. Weaker yen was affecting the gold prices.For the past two weeks, however, this factor seems to have taken a back seat. Moreover, despite a weaker Japanese yen against the US dollar, the gold prices have shown a smart rally.

Last week, it touched a four-month high of $299 per ounce in the international market. Commensurately, the domestic prices have shown similar trends.

The current rally has undoubtedly given a boost to the sagging confidence in the gold market and further strengthened the technical position of the yellow metal.

In fact, if one were to consider the speed atwhich it has rallied, a fall below the $278-level during the last week of August now appears a false break-out.

Although the yellow metal dipped below this crucial level during August this year, within a period of three weeks, that is by mid-September, it managed to come above the five-month trendline.

This rally could have been taken with a pinch of salt but the yellow metal failed to show any weakness after the breach of the falling trendline. In fact, in the past three weeks, it has surpassed two crucial resistance levels of $291 and $294 respectively. A move above both these levels is a bullish sign and suggests that the short-term outlook will remain bullish.

Other indicators such as moving averages, relative strength index (RSI) and moving average convergence divergence (MACD) have also been giving positive signals. The current rally has also brought the daily moving averages into positive mode. The price has moved the 100-day moving average -- positive indication for medium term. In fact, the wayprices have been rising, chances of a higher bottom are very bright. And that will be good for the gold investors.

Silver: Preparing for a rally

Gold is not the only metal which is trying a comeback. Silver -- the favourite of Warren Buffett -- has also been making a base for a rally. The latest move upto the $5.37 level, which is also a resistance, is one of the first steps in this direction.

With the latest jump to $5.37 level, as it can be seen in the chart, the white metal has managed to break the 9-month trendline. The move, by any standard, is a positive one. Although the white metal still needs to cross the resistance level of $5.37 level, the latest rally has brightened prospects for the metal.

This is mainly on two counts. First, the white metal has strong support level in the range of $4.62-$4.74. Incidentally, last month, it took support at the level of $4.74 and the uptrend had started from this level. This makes the above range a strong support level and in the case of a fall, itwill provide a good cushion to the white metal.

Besides a fresh break-out, the improving position of oscillators also augurs well for the metal. The medium term MACD has turned positive besides forming a positive divergence. Overall, while the next week might be dull for silver, the coming months are likely to be positive silver. Investors having faith in technical analysis can take a long position now and on every decline.