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
Weekly
Chart
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
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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