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Gold & Silver; Continuous Selling

Bullion Round Up

Gold held relatively well in the early Asian trading hours - supported by a weaker US dollars as well as the lack of trading volume since China is away on holiday. The lack of buying from the Chinese gave the bears an extra edge to take gold lower. A break below previous low of $ 1373 could open the floodgate to lower numbers such as $ 1365 to $ 1355 area. Current negative sentiments do not support gold prices in the short term. After its valiant attempt to break and stay above $ 1400 failed, gold bears are dominating the realm. Any excerpt of negative views that diminishes gold prices continues to add selling pressure while other positive catalysts have failed numerously to prop a higher gold prices. Gold remains under the bears control for some time but we are keeping a close eye on a possible rebound once the sellers are exhausted.

The US dollar index continue to affect bullion prices but we do take note that the DYX is contained in a downtrend channel and poised to break lower if it fail to hold on previous low of 81.07. Global equities are also facing dilemma as the bulls are trying to push prices higher to continue the rally. We continue to question the viability of a higher equity prices when company earnings fail to reflect or justify the current prices. Some analysts raised the alarm that the Fed QE programme has in fact inflated the housing market in the US as well as equity markets. Questions were raised if this is sustainable at all and if a major correction is due?

The short term outlook on gold is biased to the downside as the next minor support comes in at $ 1373 followed by $ 1367, $1354 and $ 1339. After the rejection on a move higher, it opens up more rooms for the bears to pressure for lower prices. Renewed short selling at or above $ 1400.00 indicate that the area is a strong resistance and only a break above $ 1425 will enable the bulls to aim for higher prices. In the meantime, we expect a period of consolidation but with a biased downside potential.

Gold Technical

Rumour on the Fed tapering as early as next week in the region of $ 5- $ 10 billion dollars sent equities lower and DYX higher. Initially, gold found support at $ 1367 and rebounded higher to $ 1376 before the rumour hit the market. We expect prices to rebound but selling pressure continue to dominate. A break pass $ 1367 will trigger lower prices around $ 1355 to $ 1345 area. The bears are clearly winning and have the intention to revisit $ 1321 level. However, the previous low at $ 1338 will be a strong support and only if that is given then we see a potential stop loss trigger scenario that could sent gold lower.

Resistance: $ 1395, $1400, $ 1423 Support: $ 1367, $ 1355, $ 1325

Traders Notes: Short gold as it breaks trend line at $ 1390 with an open target - stop loss stands at $ 1402.

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-3 months)
Bearish - target $1361 Bearish - target $ 1340 Bearish - target $ 1280

Silver Technical

As per our last commentary, we watched the dollar index closely as it continue to affect silver prices. The DYX meet resistance as it attempted to breakout from the downtrend that started from last May - after posting a high of 84.46. After posting a high of $ 22.04 prices drop lower despite the selloff in equities and the US dollar general weakness. The metal put higher low but lower high which indicate further weakness ahead. We are not surprise to see further selling pressure in this market if the dollar rebound higher. A break below $ 21.00 will open the floodgate to previous low at $ 20.00. Silver continues to trade in a downtrend and it broke below its 20 DMA after the selloff. Only a break above $ 23.35 will it encourage the bears to do more short covering.

Resistance: $ 22.20, $ 23.35, $ 25.59 Support: $ 21.10, $ 19.66, $ 19.00

Traders Notes: Stay on the side line.

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-6 months)
Bearish momentum Bearish 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. 

12 Jun 2013 | Categories: Gold

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