Gold & Silver; Chinese Dependant
Bullion Round Up
Bullion products are in demand as investors sought for additional safe haven assets to help protect their wealth. There are various alternatives to protecting one’s wealth but bullion has become an integral part in every investor’s portfolio. Owning the metal has never been so easy and with the booming industry, competitions have reduced commissions thus making it far more affordable. The demand is there as we have seen additional opening of vaults in Asia to cater this needs. There is increasing evidence which suggest the shift from West to East and gold prices are very much Chinese dependant. A strong and resilient economy suggests that Chinese demand year on year could soon outstrip the demand from India. The financial crisis did affect their potential growth but their economies have got more flexibility to spur demand.
As we approach the month of September, tapering looks set to happen depending on the new set of economic data. The amount to taper remain unclear but Steen Jakobsen of Saxo Bank felt that the 2013 tapering is just temporary and argued that more QE will be needed in 2014. Steen argued that economic growth will remain challenging and the hope to reduce QE programme could back fire. It is pretty clear that the 3 big central banks (Fed, BOE and ECB) will remain accommodative with a low interest rate for a foreseeable future. As for QE, the need to increase and decrease will be more data dependant than ever.
data that we are looking at this week are:
- US Core Durable Goods orders
- German Ifo Business Climate
- US pending home sales
- US GDP data
- EU unemployment rate
- US Chicago PMI data
Gold continue to trade inside the range and pullback has seen strong demand or short covering. Investors have also started to enter the ETFs gold market again which should give support and currency devaluation could prove to be the key for higher gold prices. Our only concern is a possible bullish resumption on the US dollar index and September tapering that could stop the current rally.
Only a break below $ 1270 will give the bears the catalysts to retest previous low. On the other hand, the weekly chart suggests that the current rally could end at $ 1415.00 resistance area (38.2% retracement from the high at $ 1800 to the low at $ 1180).
|Resistance: $ 1385, $ 1395, $ 1414 Support: $ 1348, $ 1318, $ 1273|
Traders Notes: Flat for now. Breakout at $ 1385 eyes for a potential run up to $ 1404 area but traders are also looking to short metals with stops at $ 1425.
|Short Term (1 week)||Medium Term (1-3 weeks)||Long Term (1-3 months)|
|Bullish - target 1385 / 1414||Bearish - target 1310||A rebound rally?|
Silver Technical Outlook
The white metal has remained resilient despite several attempts to push prices lower. A better than expected economic data out from China and Eurozone has allowed the bulls to support and aim for higher prices. Should it pullback from here, the market will remain healthy and allow more rooms for bargain hunters to re-enter and add on their long positions. That is based on the assumptions that gold prices could head higher which could then support the white metals. Given the increase interest in bullion again, silver may well have more rooms to the upside before the pullback.
|Resistance: $ 23.61, $ 24.00, $ 25.60 Support: $ 22.65, $22.35, $ 21.65|
Traders Notes: Flat for now after stops at $ 22.65 hit from a long position $ 20.60. Looking to re enter long or possibly short at higher prices.
|Short Term (1 week)||Medium Term (1-3 weeks)||Long Term (1-6 months)|
|Bullish target 24.55||Expect consolidation to retest support at $ 21.70||Bullish - a potential bull run?|
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27 Aug 2013 | Categories: Gold