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Gold & Silver; Tectonic Shift in Gold

We have seen in many reports and publication that physical gold is moving out of developed economies to the developing ones. Real growth and disposable income from developing economies have made this possible. It was once inaccessible to obtain precious metals due to the lack of buying power but all of that is starting to change. We have seen a big shift underway as China look to embrace and prepare itself as the next big hub for trading the yellow metal. Singapore offer security and stability that no other country can offer, encouraging further investments from established producers.

Growing demand will keep the gold prices steady above $ 1200 area for now. Meanwhile, any supply shock could play a more significant role which could influence prices in the short term. Geopolitical tensions are still affecting the safe haven trade but often fizzled out after 2 trading days. Physical investors continue to amass physical gold should prices retest the low while the lack of interest in ETFs buyer could further dampen any potential rally to $ 1500 area.

However, we could be depicting the exact situation as the above cartoon. Better economic numbers and higher employment outlook does allow the US economy a brief cheer but will it last?

Gold Technical Outlook
Weekly Chart

Is gold preparing for another steep fall? Our last commentary was built on the theory that the current chart setup is depicting a sharp drop which could keep the yellow metal at $ 1200 region or potentially lower. Goldman and several other astute analysts have discounted the real value at investing gold in the next 6 to 12 months. With a lower high and rising low, the symmetrical triangle chart is setting up to coil in the very near future. Only a successful break above $ 1335 and continuous buying will help the bull to coil higher. Should gold fail to find any support and break below $ 1240, we could then see increase selling.

Resistance: $ 1321, $ 1345, $ 1363 Support: $ 1292, $ 1278, $ 1240

Traders Notes: Risky buy should prices test support at $ 1258 with a stop at $ 1245 and target of $ 1288.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bearish $ 1258 Bullish $ 1331 Target $ 1550

Silver Technical Outlook
Weekly Chart

Weekly chart posted a doji star, showing indecision among traders to trade the white metal. This could well be an early sign of more downside movement in the white metal as interest in holding silver remains weak. We stand true with our outlook last week and the white metal continues lower to test the downtrend line. A break below the line could spell further trouble as the lower half of the Bollinger band could fulfil lower prices at the $ 18.86 region. We see no real argument to change our short term view that silver prices remain depressed.

Resistance: $ 21.57, $ 21.26, $ 21.08 Support: $ 20.58, $ 20.02, $ 18.65

Traders Notes: Sell at market open with a stop loss of $ 21.45 and target of $ 19.55. Italics are an active trade, silver sold at $ 20.69 at the open (28th July). Stop loss moved from $ 21.45 to $ 20.75 with the same target.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Flat Flat 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. 

04 Aug 2014 | Categories: Gold

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