Gold & Silver Weekly; The Looming Taper!
The inevitable seems possible now given several rounds of positive data from the US and EU economy. Investors are starting to warm up to the propaganda that all is well in the new normal and literally everyone believed that they are getting better off. There is no question that fund managers are high flyers and with big bonuses set in place, the economy will feel the trickle-down effect as demand set to increase. Bernanke has left a legacy of mini bubbles in the economy, in the hopes to maintain intricate method of printing low inflation rate in the next few years. More often than not, market dictates the overall sentiment that the Federal Reserve will do. Tapering will happen sometime next year as long as the economy continues to chug positive numbers despite increase in real rate of unemployment and increase borrowing rate.
Gold Technical Outlook
Paper seller continues to dominate the trading complex as physical buyers are wary of another round of bargain hunting. With the lack of buyers and belief in higher gold prices, the sell button looks like an easier option. The real question now is to see how much more selling will continue as we approach the end of the year with the last Fed meeting of 2013. As long as gold trades above $ 1200, there is a slight chance that prices will move in corrective rebound higher to retest the downtrend line at $ 1280 area. Only a big volume break above $ 1290 and close above that price will give the bulls more support to target $ 1375 again.
Take note that the market could push for a corrective rebound and kick start a short round of bargain hunting among investors. With yearend approaching, low trading volume is expected and any rally might be short lived.
|Resistance: $ 1256, $ 1280, $ 1290 Support: $ 12100, $ 1200, $ 1180|
Traders Notes: Flat for now. Will place a short if price break below $ 1180 targeting $ 1165, $ 1155 and $ 1145 area. Buy on the break of $ 1256 target $ 1323 area.
|Short Term (1 - 3 weeks)||Medium Term (1 - 3 months)||Long Term (6- 12 months)|
|Bearish $ 1110||Bullish - $ 1408||Target $ 1500 / $ 1600|
Silver Technical Outlook
Daily chart shows positive divergence on several occasion as silver prices hovered between $ 19.00 and $ 19.85 area. Low volume and interest in the white metal is the main driver that stymied any move higher. The silver market is biding its time as it made its way lower. We are waiting for a positive divergence in the weekly chart with a possible new low before corrective rebound. We previously commented that “Silver market look set to continue trading at such low level but reaching a certain stage of consolidating after the sell-off. It could be too early to tell if a bottom is in and the white metal will be at the mercy of the next price movement in gold. Otherwise, we could see a delayed effect on silver prices.”
In the meantime, we will stick with the above commentary. The next support is previous low at $ 18.86 and failure to hold on to that will spark further round of selling and hard liquidation. Downtrend channel line remains intact and will continue to drive the prices lower for now. Only a break above $ 21.98 can spark further buying to retest resistance at $ 25.65.
|Resistance: $ 21.05, $ 21.40, $ 21.80 Support: $ 19.85, $19.35, $ 18.85|
|Short Term (1 - 3 weeks)||Medium Term (1 - 3 months)||Long Term (6 - 12 months)|
|Flat||Flat||Bullish - a potential bull run?|
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