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Gold & Silver; Geopolitical Tensions

Geopolitical Tensions

Geopolitical turmoil has cast a deep long shadow over economic turmoil. It was rather unfortunate that such tragedy could happen to Malaysian Airlines after the earlier mishap of a missing plane. Both incidents took innocent lives and cast a great shadow over the future of Malaysia airlines.

Meanwhile, global stock markets seem to have eased with little correction as the VIX index continues to drop. The BBC reports that investors are ready to take more risks to invest their money. However, critics are cautious on such optimism and this is also shared by Miss Lagarde on current market optimism.

Investors are being lulled into a false sense of security Does this mean that it is time to stop snoozing the alarm bell and wake up to reality? Is there really financial stability in any developed economy of this era? Some would argue that some sort of stability is better than none and the market have adapted well. What could be worse when things has not picked up for the good?

The old war between Israel and Palestinian continue to rage and raked up a higher number of death tolls. Conflicts between the 2 countries are well known and often innocent lives are taken away. Diplomatic solutions are out of the question at this stage and the long month of fighting will continue until a certain element of truce is reach.

It is not ironic then that this particular report was written, edited and completed at my parent’s house.

Gold Technical Outlook
Monthly Chart

We have purposely picked on the monthly chart to give a wider indication of what could be in store. There was no doubt that the correction in gold throughout the last few months have severe and rather imminent. It is a healthy correction that is needed as the market flushed away investors that see no value in the yellow metal as the economy made amends.

However, it remains too early to call for resurgence in prices but we are optimistic that it could happen in the next few months on the back of several scenarios:

  • Stock market is overdue for a correction
  • the MACD fast line is about to cross higher
  • RSI is bouncing higher but the lack of interest could stifle

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

Traders Notes: Should support fail at $ 1292, prices could break lower to target $ 1248 area. Upside potential could remain tight as the upper Bollinger band converged.

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

The white metal did break higher after a lull period of disinterest from investors. The weekly chart shown below indicate that the silver price may have a medium low and a significant run up higher could be on the cards. Despite that, prices could easily break below and retest support at $ 20.45 area. Failure to hold above that support area could transpire into a more selling.

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

Traders Notes: Trade at your own peril

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. 

22 Jul 2014

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