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Gold & Silver; FOMC, Ending the Party

Bullion Round Up

Bullion prices remains range-bound as investors look for the next clue in the next FOMC meeting. The media build-up on a potential tapering has caused many to stay on the side line. Uncertainty dominates the market that seems to have got too much ahead of itself - and we are seeing some common sense to retrace lower on the dollar index. However, the dollar index could easily turn higher once the Fed clear the air and confirm the amount of tapering. There were market concern in the emerging economies as the flow of easy money could end and this result in the selloff in their stock markets. The topic on tapering this week will be the main highlight as Fed officials continue to monitor incoming economic data. Lately, the economic data is mixed but with a glimmer of hope that the recovery can be sustain as long as other variables remain in balance. Other variables such as the stability of the Eurozone are paramount and China growth rate are key to the global economy engine. Relying entirely on the US for growth could certainly unwind all the progress made ever since the 2008 financial crisis. The crisis is not over but merely averted for now.

Next week economic data that could move market are German ZEW economic sentiment, US Core CPI, Building permits, Housing Starts, Existing Homes sales, FOMC meeting and UK Retail Sales data. We remain vigilant and watching for a possible US dollar index rebound that could dampen any higher gold price. The lack of conviction and certainty has left the US dollar bulls exhausted, closing out their long positions for the moment. FOMC meets next week to discuss their decisions - meanwhile WSJ Jon Hilsenrath had already made it clear on his recent articles that tapering could be implemented with a possible reduction of $ 5 - $ 10 billion dollars as early as next week.

The short term outlook on gold is biased to the downside as the next minor support comes in at $ 1365 followed by $1354, $ 1339 and $ 1321. 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

Last week, gold traded lower to retest support at $ 1365 but buyers were found and ended the week at $ 1388.00 area. After breaking below $ 1400.00, the bears took control and heavy selling pressure sets in as the Chinese was away on holiday. The lack of physical demand failed to support prices. A high of $ 1394.50 was posted last week after a strong rebound but we continue to argue that it is better to sell any rallies. Gold continue to range trade between another well found support at $ 1374.50 and $ 1394.00 area. We continue to expect a sell in any rallies that gold made. A break pass $ 1373 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: $ 1373, $ 1365, $ 1355

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

A weaker US dollar index and equity market gave the silver prices a boost. Buyers came and went, initially pushing prices to a high of $ 22.50 level before retracing lower again. Prices spiked higher and technically, the daily chart oscillator has crossed higher. RSI continues to diverge higher despite the lower prices. We remain uncertain on the silver market and will continue to suggest that staying on the side line is the right option.

Resistance: $ 22.51, $ 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.

17 Jun 2013 | Categories: Gold

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