Gold & Silver; Shock & Awe!
Bullion Round Up
It is beggar’s belief that in a world of low interest rate, continuous money printing and political tension in Israel and N. Korea - we witnessed a massive and coordinated selling on precious metals simply because there was no inflation in the western countries. Inflation is a time bomb with no definitive deadline and we have address this argument before that it could well be the next catalysts to push the precious metal higher. We suspect that further selling and fund liquidation are justified as fund managers look to join in the stock market rally. Safe haven buying seems to favour the German Bunds and the US treasuries. Precious metal failed to rally time and time again despite the supportive remark by Fed officials.
The selloff in precious metal continues as long as the key word “taper QE” is mentioned by any Fed officials. Yesterday we just witnessed more money printing programme from Bank of Japan. We also expect the next governor of BOE to increase the existing QE programme. Meanwhile, the ECB is mulling over plans to cut interest rate further to boost the economy that increasingly face contraction. The money printing programme is now officially a race between the US, Europe, UK and Japan. Japan claims to use it to fight deflation while the other 3 are using it to prop their ailing economy that is heavily in debt. We are unable to envisage the consequences should the Fed reduce their QE programme and argued that QE is here to stay even after reaching the unemployment rate of 6.5%.
Looking further ahead, the financial crisis in Europe is far from over. Slovenia and the Netherlands may soon step in to replace the previous “Bailout Ballerina” - Cyprus. The US sequester could add negative pressure on up and coming economic data while the UK continue to struggle with its current deficit and possible triple dip recession. The political tension in the Middle East may have subsided but it could spell more trouble in the weeks ahead. Meanwhile, Mr. Kim should be treated more seriously ever since he brandished his nuclear capability.
Gold
Technical
We
expect more price volatility on gold as the bears remain in control.
In addition, today’s nonfarm payrolls data will determine the next
direction that gold will take. We advise our readers to stay on the
side line as it is hard to catch a falling knife.
Previous low made
at $ 1522.48 will be the final support before triggering fresh stop
loss order. Should that be given, gold will free fall before finding
any new support.
Gold
continue to look weak technically and the recent sell off create
various pockets of resistance. It dipped to a low of $ 1540.18 before
bouncing higher but met resistance at $ 1554 after a worse than
expected US jobless claim numbers.
The selling pressure from the gold
back ETF has not abated and the lack of physical buying did not help
support the price. As per our last commentary, we suspect that dip
buyers are on the prowl while the physical buyers are waiting for
lower prices to place their long positions.
|
Short gold at $ 1539
target $ 1525 with a stop loss at $ 1546
Long gold at $ 1522.50 target $ 1540 with a stop loss at $ 1512.50 Resistance: $ 1564, $ 1571, $ 1579, $ 1594 Support: $ 1535, $ 1522 (2012 low) |
Silver
Technical
Technically, silver continue to show weakness as it trades at the lower of the Bollinger band. The MACD remains in the negative zone and crossed lower which further indicate selling pressure. Meanwhile, the RSI has drop to a severe oversold area with the stochastic fast line continue to the downside. Silver took out several support levels and eventually found some buying interest at $ 26.64 but the lack of follow up buying will indicate more selling. We continue to be bearish and look to sell on any rallies unless it can break above $ 27.75.
We
have made in our previous commentary that we will not get carried
away due to a dominant US dollar which continues to cap any rallies
and we have on many occasion repeat caution of any silver trade.
Unless silver can trade above $ 29.50, we will remain bearish and
felt that there is too much volatility (and non-volatility) to take a
position.
|
Long silver at $
29.40 target $ 29.80 with a stop loss at $ 29.15
Short any silver rallies Resistance: $ 27.35, $ 27.56, $ 29.50 Support: $ 26.64, $ 25.97 |
Trade
Recommendation Results - March 2013
Over the month of
March, we have recommended several short and long positions both on
gold and silver. Below is the result of our recommendation as well as
the stop loss triggered. We hope our readers enjoyed reading our
daily bullion round up and benefit from our trade recommendation.
Gold Results
| Date | In | Date | Out | Change | Notes |
| 05th March | 1568.50 | 06th March | 1572.50 | (4.00) Stop Loss | SL triggered - Short gold |
| 10th March | 1592.00 | 13th March | 1596.50 | 4.50 | Long gold |
| 13th March | 1580.00 | 14th March | 1577.50 | (2.50) Stop Loss | SL triggered - Long gold |
| 15th March | 1592.00 | 18th March | 1598.00 | 6.00 | Long gold |
| 15th March | 1592.00 | 18th March | 1604.00 | 12.00 | Long gold |
| 22nd March | 1606.50 | 26th March | 1595.00 | (11.50) Stop Loss | SL triggered - Long gold |
| Total |
|
|
|
5.00 profit |
|
- A series of volatile long and short
- Mixed market which suggest the bulls and bears are at war
- Bears won the fight for now
| Date | In | Date | Out | Change | Notes |
| 7th March | 28.45 | 8th March | 28.55 | (0.10) Stop Loss | SL triggered - Short Silver |
| 11th March | 29.15 | 14th March | 28.85 | (0.30) Stop Loss | SL triggered - Long Silver |
| 22nd March | 28.20 | 26th March | 28.40 | (0.20) Stop Loss | SL Triggered - Short Silver |
| 28th March | 28.15 | 29th March | 27.90 | 0.25 | Short Silver |
| Total |
|
|
|
0.45 Loss |
|
- Limited trading opportunities as the market swings violently
- Trading the white metal cautiously
