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Gold & Silver; Further Easing in the Pipeline

As we approach the end of the financial year, trading volume is expected to dwindle. Large institutions and investors are looking to consolidate their current position to shore up their cash holdings. Banks and analysts are making big statement and projections for the new quarter. Economists are barking up imaginary numbers and giving probability of what could and may happen in 2014. Meanwhile, the precious metal community is still licking their open wound from the selloff. It might be too early to judge but $ 1180 will do as the low for the year. At the moment, gold is just holding up above $ 1300 given the weak US dollar despite the lacklustre physical demand. In addition, investors are awaiting more economic data before stepping on the gas to either sell or buy. US unemployment rate numbers will certainly be a key event followed by a Chinese CPI numbers. Chinese government is working on their next economic plan, while their neighbours - Japan continues to print more money to bolster their fragile economy. Their counterpart - the Eurozone has no intention of increasing interest rate and Mr Draghi is under intense pressure from the market to deliver some sort of solutions. We felt that the equity market is heavily overbought and correction near to the end of the year sounds viable.

Gold Technical Outlook

4 hour Chart
Only if the US dollar has leg to move higher, we fear further selling on the gold complex could escalate. However, we felt that the current complex is already oversold and there is room to move higher on the back of US debt ceiling, less rosy economic data and further monetary easing by central banks. In the meantime, we are watching the overbought equity market which could spur profit taking and potentially a switch to safe haven buying as we approach another round of political wrangle. In addition, talks between Iran and the US regarding their nuclear programme could add further uncertainty.

Technically, the market needs a catalyst to move away from its current trading range.
We previously commented on the following scenari “Given such scenario, we see gold moving lower potentially to retest $ 1311 area and could go as low as $ 1293 area if the dollar managed to squeeze to the next resistance. We advise to go long should gold retest $ 1290 to $ 1303 area.”

Resistance: $ 1346, $ 1360, $ 1374 Support: $ 1309, $ 1292, $ 1252

Traders Notes: Otherwise, buy if it retraces back to close previous gap at $ 1296 area. Only sell if break $ 1276 area and close below the price level.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Cautiously bullish - $ 1438 Bearish - $ 1215 Target $ 1500 / $ 1600

Silver Technical Outlook

4 hour Chart
We can only justify the fall on silver basis on the weekly chart analysis. Weekly analysis made a clear warning that the weekly chart versus the daily chart creates a dilemma on the direction that silver could go. Weekly chart dominate with a strong bearish indicator as prices continue to trade in a downtrend channel. Meanwhile, the daily chart gives a slight bullish indication that it could break higher. As per our warning last week, “Daily chart paints a possible bull run but we will be cautious as we enter the end of the week and month soon.”

Resistance: $ 23.25, $ 23.90, $ 24.53 Support: $ 21.40, $20.80, $ 19.50

Traders Notes: Should the blue channel line get tested on a possible pullback then we recommend readers to go long. Buy at $ 21.35 stop loss $ 20.55 target $ 23.50 again.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Possible retest of $ 20.60 area Bullish to test $ 24.80 area 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. 

07 Nov 2013 | Categories: Gold

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