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Gold & Silver; Party Hard Before Dectaper

The sound of no tapering is almost so assuring to the global equity market as well as other asset bubbles that depends on the money printing programme to continue. It seems like a good time to question the real intention of the Federal Reserve in making loud noises and yet failed to show the goods. Given the amount of times it has attempted to send a “clear” message, traders and investors might as well ignore the FOMC statement given how irrelevant it has been. The current equity, commodity and currency market is dictated by hot money and speculators with one intention of keeping that bubble inflated. Meanwhile, Fed officials continue scratching their heads on what they could do to avert a potential hyperinflation in the near future without damaging the recovering economy. Some say recovery are wishful thinking at this stage and we argued that it is going to be a long hard road ahead as the world economy plod along the edge of recession, deflation and then a small recovery.

Gold Technical Outlook

4 hour Chart
Revising on the commentary we made last week: “However, these advances may be short lived because the RSI failed to make new high despite higher gold prices. Should the dollar strengthen, we felt that gold will lose some of its momentum to retrace lower before trying higher again.”

We simply advise on the facts that the market sentiment is shifting given how oversold the dollar has been. The dollar index posted higher as of the time of writing at 80.25, with the next resistance standing at 80.76. Short term chart indicate an overbought condition on the dollar but it is early days with a slight retrace before another attempt higher. 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: Possible short from $ 1353 with a target price at $ 1317 (currently in transit with stop loss raised to $ 1328). Otherwise, buy if it retraces back to close previous gap at $ 1296 area.

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.”

Weekly Analysis: We continue to sit by our argument last week that “Daily chart shows a potential run up to retest the channel line but weekly chart shows that it is still trending in the bigger downtrend channel that started since May 2011.” We felt that silver prices could pull back a little lower before continue to advance higher. Only if it break and close above $ 23.05, then more upside can be considered at this stage. 

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. 

01 Nov 2013 | Categories: Gold

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