Gold & Silver; Precious metals Breakout is Imminent
Bullion
Round Up
Bill
Gross - the bond king says to buy gold as inflation hedge. He
argued that while loose monetary policies and money printing will
continue for a while, at some point it will have to stop. Gross sees
trouble brewing in the artificially priced US Treasury market. There
are other supportive fundamentals on bullion such as China import
record amount of gold in 2012, continuous buying from Russia, German
repatriates its gold, ultra-low interest rate environment and last
but not least currency debasement that could spark currency wars. The
irony is that gold price remains capped and some analysts argued lack
of catalysts are the major cause. Technically, both precious metals
are set up for a potential breakout.
Economic
Round up
On
the economic front, we have a host of economic data for the UK and
European market. The ECB press conference will be highly anticipated.
Market expects Mr. Draghi to stay on course with no changes from his
previous notes despite the hint of a possible cut in interest rate.
In addition, there is US Nonfarm productivity (QoQ) and US weekly
initial jobless claims to be publish. Meanwhile, PM Abe encouraged
companies to increase basic salary and play down the fear of
hyperinflation. With the dollar index rising, JPY last traded at
93.70 bolstered by the announcement that Bank of Japan Governor Mr.
Shirakawa is due to step down on March 19. This will allow PM Abe to
appoint a candidate who shares his view on monetary easing.
Gold
Technical
Short
Term:
Gold price remain unsettled after a bout of volatile trading
range between $ 1665 and $ 1686. Technically, the 4 hourly-chart
suggest that gold made higher lows and stayed well above the
ascending trend line. However, the upside remains capped at $ 1686
and only if prices break above then the next resistance will be $
1697. Stochastic is pointing lower which suggest selling pressure
while the MACD is rolling flat. A break below the ascending trend
line could have bearish implication.
Medium
Term:
The daily chart shows that gold is trading above the 200 DMA ($
1663.68) support. Bollinger bands suggest that a potential breakout
is near with a slight bias to the upside. A break of $ 1686 and $1696
will allow us to be more bullish. CFTC report also states that we are
close to record high on gold short position which may indicate a
limited selloff. Any violent price breakout to the upside will only
trigger more short covering. However, the jury is still out with
regards to when this may happen and if gold still need to test
several support levels.
Short gold if the support at $ 1652 gives way. Gold is still consolidating and we will only change our neutral stance to bullish if gold takes out $ 1686 and $ 1696. Resistance: $ 1686, $ 1697 (previous high), $ 1700, $ 1710 (50% retracement from Oct high) Support: $ 1663, $ 1653, $ 1647 (long term uptrend line), $ 1635, $ 1625 |
Silver
Technical
Short
Term:
There were 3 successive high made on silver prices that were
descending ($ 32.46, $ 32.27 and $ 32.10). The Bollinger bands are
closing in again which suggest a growing pressure of an outbreak.
Take note that prices remain capped on the upside while recent
trading has created a higher low. Stochastic is attempting to cross
higher but MACD remains flat (basis on 4 hour chart). Such mixed
signal suggests staying on the side line is best and only act once
there is some direction.
Medium
Term:
The daily chart stochastic has crossed higher but still
vulnerable to the downside if selling pressure emerge. MACD remains
flat - giving no strong indication or direction. We maintained our
neutral bullish stance on silver and look to target $ 32.47 and then
the 2012 - 2013 resistance line at $ 33.29.
A break below $
31.60 will push prices to retest support at $ 31.23 area. Look to
buy silver if it can cross the downtrend line at $ 32.10 and
target the previous high of $ 32.40 area.
Resistance: $ 32.47 (month high), $ 33.54 (downtrend line), $ 35.35 (October high) Support: $ 31.23 (38.2%), $ 30.60 (200 DMA), $ 29.25 (January low) |
Currencies
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 Feb 2013 | Categories: Gold