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Gold & Silver; Downward Momentum, Analyst Predicts Lower

 Big cheers to the Chancellor George Osborne on his risky yet inspiring take of the UK economy. After months of doubts and relentless criticism, the chancellor stood tall and proud of the decision he made to continue in the austerity path. A slow and steady recovery was the headline he always promoted, promising job growth and applying painful economic policies, has put the conservative party under the spotlight in a good way. The general consensus felt otherwise, despite the growing GDP - many felt that individual income shrunk and there is increasing pressure in the middle class with the current standard of living.

No real surprise to see that inflation number has risen for the worse as some would say. With the average earning still at all-time low, inflation has eaten away any sense of extra income. The economy is growing on the back of utilised spare supplies (jobs which was once lost has picked up again). Economist could argue that during recession, certain industry was struck worse but that particular industry could also generate the most jobs post-recession.

Meanwhile, the chancellor has to take some action to cool off the ever rising house prices. 2008 financial crash was made of subprime mortgage, greed and ever rising house prices. One could argue that the 2 factors are a little stifle but rising house prices could pose as a growing problem. Economic policies are often too slow to react but we have seen that Mark Carney acknowledge the issue and he has set market expectation of a higher interest rate in 2015.

Taking a good long view is not a bad idea but certainly with a pinch of salt.

Gold Technical Outlook
Weekly Chart

A higher low in the weekly chart bodes well but we remain cautious that this is a steady build up with a lower high. The price action is showing signs of a symmetrical triangle - with a steady build-up of a more volatile price action. More often than not, such price action is a continuation pattern and we are biased to more downside action. The direction in the yellow metal changed drastically near the end of 2012 and has steadily continued with a severe correction. It will take several big economic or geopolitical event to create a big reversal in the current price action.

Resistance: $ 1321, $ 1345, $ 1363 Support: $ 1292, $ 1278, $ 1240

Traders Notes: Risky buy should prices test support at $ 1258 with a stop at $ 1245 and target of $ 1288.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bearish $ 1258 Bullish $ 1331 Target $ 1550

Silver Technical Outlook
Weekly Chart

Weekly chart posted a doji star, showing indecision among traders to trade the white metal. This could well be an early sign of more downside movement in the white metal as interest in holding silver remains weak. Despite the better than expected economic news out of China, silver prices remains depressed but we took note that $ 18.58 remains the last line of defence which was tested thrice. A descending triangle formation is in play with a higher chance that silver prices could set to fall further.

Resistance: $ 21.57, $ 21.26, $ 21.08 Support: $ 20.58, $ 20.02, $ 18.65

Traders Notes: Short should it break $ 18.58. Sell at market open with a stop loss of $ 21.45 and target of $ 19.55.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Flat Flat 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. 

28 Jul 2014

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