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? |
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15 Nov 2013