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Gold & Silver; Same Old Ben Yellen

Same Old - Ben Yellen

The equity market continues to surge higher given how accommodative central banks are. They made it clear and simple that low interest rate is here to stay despite encouraging sign of recovery in service and manufacturing. However, we have argued on several occasions that the recovery must not be treated as a turn-around given how fragile the global economy is at the moment. Excess supply of workforce and dwindling demand is the inevitable future that we are all facing. Economy is a psychological game which then affects consumers’ perception and spending limit. Newly elected politicians can shout and be proud of encouraging signs of a turnaround but it remains debatable if this traction will continue. We argued that easy money from central banks will have to continue for a foreseeable future simply because the economy is hooked and the lack of reforms in the current setup failed to address previous mistakes. We continue to feel that the equity market is heavily overbought and correction near to the end of the year sounds viable. Deflation among developed economy will be the next big problem ahead of 2014 which will then be replaced with higher inflation rate in the next few years.

We leave you with the statement from Miss Janet Yellen.
"It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter are limited," she said. "I agree that this programme cannot continue indefinitely," but added that it certainly would continue for the foreseeable future.

Gold Technical Outlook

4 hour Chart
Sell off on the back of a stronger US dollar recovery and continued talks of tapering in December have spurred the short seller to drive gold price down as much as $ 1262 area where it found support. With the RSI reaching oversold territory and retested several times, one can argue that a corrective rebound is underway. The buy signal at $ 1296 was stopped out after prices break below support at $ 1276. Current 4 hour chart setup indicates that the moving averages are moving in line for a move higher. As long as support hold above $ 1262 and $ 1277, we should see $ 1305 and $ 1322 being tested. We will set another buy at $ 1278 with stop at $ 1251 area.

Technically, the market needs a catalyst to move away from its current trading range.

Resistance: $ 1306, $ 1360, $ 1378 Support: $ 1378, $ 1262, $ 1251

Traders Notes: Long 1 unit at $ 1278 and add accordingly with stop at $ 1251 - targets at $ 1317, $ 1335 and $ 1364.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Cautiously bullish - $ 1404 Bearish - $ 1215 Target $ 1500 / $ 1600

Silver Technical Outlook

4 hour Chart
Silver broke lower and breached the all-important daily uptrend channel line. Additional selling pressure on the back of a strong equity market and weaker gold prices send the white metal below $ 20.50. This is despite upbeat economic data as well as growth expectation among the developed economies. So why is it that the white metal failed to rally on the back of better economic outlook? Weekly chart dominate with a strong bearish indicator as prices continue to trade in a downtrend channel.

Resistance: $ 23.25, $ 23.90, $ 24.53 Support: $ 21.40, $20.45, $ 19.50

Traders Notes: Previous long position got stopped out. Look to place another long should prices breach above $ 21.55 with target at $ 22.15.

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. 

15 Nov 2013

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