Gold & Silver; Calm before the storm - Sharps Pixley
Asian market started with its earlier gain wiped after a less positive Chinese manufacturing PMI register at 50.40 against the expected 50.90. Investors were left surprised after the world biggest economy shrank at an annual rate of 0.1 % in the 4th quarter when forecast was for a 1.1%. The US dollar continues to pare losses while the Euro remains bullish after various positive economic data from Germany unemployment data. However, not everyone agrees that the Eurozone has escaped from the 2012 financial crisis scot-free.
The Economist argued that the crisis was postponed and today Moody’s report seems to assert such possibilities. According to Moody’s, a Greek default remains possible as they expect the country’s economy to contract this year. Despite that, investors are piling their cash to the Euro for now.
Elsewhere, the
Milan bourse tumbled 3.4% as a political scandal unravelled on the
world’s oldest bank Monte dei Paschi (MPS). As per our last
commentary, we are expecting a better non-farm data with an unchanged
unemployment rate. Precious metal investors will take cue from these
data after digesting the rather similar FOMC statement (from previous
January) and we expect a volatile trading for the rest of this week.
Gold
Short Term: This
morning, the yellow metal traded lightly at $ 1664 after a failed
rally. Traders booked in their profit after a positive rally to $
1685.00. Selling pressure in the early Asian trading hours sustain
gold momentum to break higher. Prices will remain range bound at $
1660 to $ 1690 since we are expecting the non-farm payroll data later
today. The data is crucial and could determine the direction on gold
prices. Gold has support level at previous low of $ 1652 and January
low at $ 1625. We are back to neutral bearish at this moment and
would stay on the side line. Gold attempting to break the resistance
level which was the previous support at $ 1664.14.
Medium Term: There
is a similar daily pattern on this week’s gold price movement. We
have seen prices moving sideways during Asian trading times and only
to be sold as Europe opens, regardless if the Eurozone stock market
is up or down. Significant volume is traded as we get close to US
trading hours where traders make or break their balance sheet.
Analysts said that the market had already priced in that it would be
premature for the fed to abandon the QE programme. Therefore, this
Friday’s employment report remains crucial in forming market
expectations on future Fed policy.
| Our buy stop position is close out on via the stop loss. At the moment, we will stay on the side line and only buy should prices rallied on the back of bad unemployment data. Shorting the market only if the support at $ 1652 gives way. Resistance: $ 1696, $ 1697 (previous high), $ 1700, $ 1710 (50% retracement from Oct high) Support: $ 1653, $ 1635, $ 1625 |
Silver
Short Term:
Silver
prices gave back all its gain and went below initial support at $
31.81 followed by the 38.2% retracement line at $ 31.23. Following
our last commentary, we placed a trailing stop on our buy position at
$ 31.85. Given the current price action, we are back to neutral
bearish since silver prices were not able to sustain its gain. We did
warned despite the upside momentum, prices are still subject to this
Friday’s non-farm payroll data. We are looking to buy on the dip
but will not hesitate to short the market if support failed at $31.00
(uptrend line). Looking at the 1 hour chart raised a concern of a
possible head and shoulder with a neckline at $ 31.12.
Medium Term:
Silver failed to close above the January high at $ 31.46 and doubts
engulf after posting a reversal doji. Failure to hold on the initial
support encouraged sellers to take control and pushed the prices
lower. Given the lack of follow through buying, intraday traders took
profits and square of their position.
|
Silver failed to hold on to its gain
and tripped our trailing stop target ($31.85). We will short the
market should it fail to hold on above $ 31.00.
Resistance: $ 32.47 (month high), $ 33.54 (downtrend line), $ 35.35 (October high) Support: $ 31.23 (38.2%), $ 30.60 (200 DMA), $ 29.25 (January low) |
Currencies
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01 Feb 2013 | Categories: Gold
