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Gold & Silver: Technical Outlook

It is no secret that the global economy will bounce back into life. However, questioned has been raised if the short term solutions will provide a strong platform for the economy to get back to its former glory. The clue to this answer is (look around you) and you will soon favoured no as an answer. An article by Jeremy Warner of Telegraph pictured a sombre but realistic view to a neutral pace in the next few years or even decade. Permanent stagnation was the key word used by Mr Warner, with the argument that after the 2008 financial crash slightly further away - the current outlook remains uncertain and weak. He also offered the suggestion that current solutions could potentially lead to bigger financial problems. We heed his comments and ever since the start of this commentary, we have made a strong view that not doing anything in the short term will cause havoc in the economy but in doing so, we are creating future problems as the global casino (i.e. banks, hedge funds and many more) are back in business with easy money.

A growing world population is littered with rich old people, while the younger generation has to work a lot harder and longer to attain previous standard of living. Economic cycle has its peak and trough for a good reason. Sustaining this so called peak or semi peak could soon prove to be futile. The so called next economic boom will favoured lesser number of people and instead there will be a growing number of resentment on those in the lower working class. Social economic problem is a time bomb for as long as the economy favoured only the elites.

Gold Technical Outlook
Weekly Chart

Should the yellow metal managed to garner more buying momentum; the next ideal target is the downtrend line at $ 1351. Only a break above that key resistance will allow the bull to extent the run higher. Judging at the current situation, we favoured to short the metal should it extend any higher. That is despite a positive weekly close after several dovish comments from economic leaders and at the same time, safe haven buying on the back of a turbulent week in NASDAQ. Several indicators are showing a flat sign and the cycle low could resume in the next week or so. Reduced weekly volume, RSI holding above 50 and a possible cross lower on MACD further indicate weakness in the next few weeks.

Resistance: $ 1325, $ 1347, $ 1355 Support: $ 1266, $ 1277, $ 1304

Traders Notes: Short at $ 1337 stop $ 1351 target $ 1266 area.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bearish $ 1255 Bearish $ 1200 Target $ 1550

Silver Technical Outlook
Weekly Chart

The white metal is our preferred metal to break higher as global outlook in the next 3 to 6 months could soon pick up. A stronger demand in copper and other base metals from China may provide that needed support and allow the price to break higher to the $ 21.00s. It is crucial that silver can continue to eke out support around the $ 19.55 to $ 19.75 area. A sudden surge in demand could see prices rising higher and retest several key resistances. However, prices will remain capped in this downtrend line but we see higher prices in the next few weeks once the moving average crossed higher. Prices need to dictate this pace first as we have seen in many occasions.

Resistance: $ 20.09, $ 20.50, $ 21.48 Support: $ 19.50, $ 19.67, $ 19.77

Traders Notes: Should the price stabilise and found support at $ 19.50, buy with a stop loss of $ 0.30 to target the downtrend line at $ 21.40.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Flat Flat Bullish - a potential bull run?

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. 

14 Apr 2014

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