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Gold & Silver; Tapered Out!

Bullion Round Up

Yes, that is correct. Gold and silver prices continue to be tapered as investors flee and lose faith in holding the safe haven metals. Despite the fact that the Federal Reserve maintains an accommodative stance, the talk on tapering sent shivers and a stronger US dollar index. Analysts said the two factors are big enough to add selling pressure as long term investors are force to unwind their positions. Prices dropped at an alarming rate due to force liquidation from margin clerks. The bullion market is still heavily influenced by the policy undertaken by the US Federal Reserve. Even though other major central banks are printing and remain accommodative, prices remain subdue and rallies are sold. Selling pressure intensifies as gold backed ETFs see another big outflow.

At the moment, we are bearish on both metals - a retest of lower numbers is possible. Technical traders continue to aim for a lower number such as $ 1150 to $ 1050 before a reasonable rebound can be seen. The bears remain in control despite an oversold RSI indicator and technically, a retest of $ 1150 is possible. China continues to buy physical gold but with the continuous outflow in ETFs, prices will face selling pressure. Below is a detailed summary from Julian Phillips Gold & Silver article:
We are now getting a feel for the size of daily Asian demand being around 2 - 5 tonnes on a regular persistent basis. So sales from the SPDR gold ETF above that holds the gold price down. As we keep saying, the gold price will continue to fall so long as the sales from the SPDR gold ETF continue at above 5 tonnes. The difference between Chinese demand and SPDR gold sales is that Chinese demand is persistent, regular and likely to persist on an ongoing basis, while SPDR gold sales will eventually halt completely.

Gold Technical

We are not surprise to see gold bulls giving up and closing out any of their long positions. The lack of support is evident as prices break lower from $ 1269 to $ 1225 within hours of early Asian trading hours and a break of 1220 and 1200 came swiftly. Contrarian investors felts that gold is over reacting to a better than expected US economic data as well as the talk on Fed tapering QE programme. In order for gold to break higher, a short covering rally could well go underway as we approach the end of the week and end of the month. In addition, the yellow metal is heavily oversold as shown on the RSI indicator. We felt that gold need to find a strong support before it can retest resistance.

Resistance: $ 1222, $1265, $ 1300 Support: $ 1180, $ 1155, $ 1100


Traders Notes: Waiting on the side line - a break below $ 1200 will add selling pressure.

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-3 months)
Bearish - target $1220 Bearish - target $ 1150 A rebound rally?



Silver Technical

Silver remains under selling pressure and trap within a downtrend channel of a bearish market. A depressed economic situation has not helped silver as an industrial metal. In addition, its price is heavily influenced by gold after all it is considered as the cheaper alternative. Investors favour lower silver prices and we may continue to see it weaken before any rebound rally. In the short term, prices will continue to consolidate and break lower. Unless we see short covering in gold, we can expect silver prices to remain in this downward trend.

Resistance: $ 21.51, $ 22.35, $ 25.59 Support: $ 18.38, $ 18.00


Traders Notes: Stay on the side line.

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-6 months)
Bearish momentum Bearish 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. 

28 Jun 2013 | Categories: Gold

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