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? |
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article is written according to the author’s views and by no means
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03 Feb 2014 | Categories: Gold
