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Gold & Silver; Global Recovery will Dampen Gold

As the Chinese Lunar New Year surge in demand for gold come to an end, we see minor correction as gold retraced lower after hitting high of $ 1276. Improved economic data forced the Federal Reserve to taper another $ 10 billion and Miss Yellen seems to be well underway in taking control of the market sentiment. Before she chaired the top role, she made it clear that easy monetary policy will stay on the table for as long as needed. At the moment, the recovering economy can do with less easing. Equity tumbled and the minor correction is underway, with the real question of how much correction will there be?
Developing economies will take the biggest brunt as “hot” money continues to move back to developed economy. Our take is that the currency market in those economies will have to adapt with higher interest rate and possibly a minor turbulent with liquidity. Meanwhile, developed economies will have to face higher inflation and possibly an overheating economy.

Gold Technical Outlook

Weekly Chart

Ever since the start of 2014, the yellow metal has started rather well to move higher. However, the steam to go higher seems to have reached a stalling momentum. Succession of higher high stopped as we approached the end of January. Gold will be vulnerable to selling in the next few weeks once support breaks $ 1238 and $ 1228. A revisit at $ 1180 is not out of the question if $ 1200 fails to hold. It remain possible to reach as low as $ 1125 or beyond that at $ 1040. The weekly downtrend remains solid, with a rebound as an opportunity to sell further.

Resistance: $ 1277, $ 1296, $ 1324 Support: $ 1237, $ 1227, $ 1180

Traders Notes: Flat for now. Buy on the break of $ 1301 target $ 1324 (stop at $ 1291).

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bearish $ 1221 Bullish - $ 1321 Target $ 1400

Silver Technical Outlook

Weekly Chart

As gold continue to see downward pressure, silver on the other hand did not manage to move higher. Instead, it has been struggling despite better economic data which to date remain a question if this recovery is here to stay. Downtrend channel line remains intact and will continue to drive the prices lower for now. Only a break above $ 21.05 can spark further buying to retest resistance at $ 21.80, followed by $ 22.20.

Resistance: $ 21.05, $ 21.40, $ 21.80 Support: $ 19.00, $ 18.85, $ 18.55

Traders Notes: Flat

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. 

03 Feb 2014 | Categories: Gold

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