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.
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.
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?|
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
|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?|
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28 Jun 2013 | Categories: Gold