Gold & Silver; Upside price movement capped?
Bullion
Round Up
Despite a strong
increase in US dollar index, bullion prices reacted positively and
made headways to find support before crawling higher. Traders remain
cautious as short term gains could easily lose ground to quick profit
taking if there are any good economic data. Gold is still trading
within a tight range where the bulls and the bears have no total
control. It is also reacting rather like a safe haven assets. But
currently it is not so appealing to hedge fund managers who are
thinking to reduce their gold holdings as they see a receding
economic crisis. Not everyone agreed as they argued that gold remain
a strong inflation hedge tools.
Economic
Round up
Asian shares take
its cues from their Western counter-parts as they ended the day in
negative territories. Spanish corruption allegations hit market
confidence and caused a rise in Spanish bond yield. It was not so
different with Italy fiasco that also undermines its credibility.
Euro took a tumble which benefited a strong recovery on the US dollar
index. The head of Bank of Mexico warned of ‘perfect storm’ for
global economy that is addicted to loose monetary policy. He feared
that financial markets are being overly optimistic which could lead
to mispricing in some asset classes.
Gold
Technical
Short Term:
This
morning gold traded in a tight range of $ 1675 and weakened to $ 1670
area. The uncertainty in the Eurozone helped short term gold prices
to move slightly higher. However, we remain neutral and look to trade
according to the direction of the market. Gold price remains stuck as
prices coiled into a tighter ascending wedge pattern. Technically, it
is setup to rise but bouts of profit taking capped upside movement.
Medium Term:
Technically, a breakout on gold prices may come sooner rather than
later. A break higher to $ 1685 gives a bullish signal to retest
previous high of $ 1697. Should that fail, the bears will be in total
control to push it back down to $ 1625. The MACD is rolling flat but
stochastic showing more bullish sentiment. It is a matter of time
before prices breakout from this potentially bullish pennant.
We look to short the market only if the support at $ 1652 gives way. In the meantime, gold may need to consolidate further and find support before eventually taking out the higher resistance. Look to buy only at $ 1686. Resistance: $ 1686, $ 1697 (previous high), $ 1700, $ 1710 (50% retracement from Oct high) Support: $ 1653, $ 1647 (long term uptrend line), $ 1635, $ 1625 |
Silver
Technical
Short Term:
Silver
traded confusingly as traders bought the market to go higher and sell
it hard after the short rally - back down to where it all started.
Having failed to break lower at $ 31.66, silver prices did a reversal
to test yesterday high of $32.12 but failed to get anywhere close to
erode the overhead resistance at $ 32.47. It is another day and
another setback in the bull camp as prices are still very volatile.
Medium Term: The
positive news on silver is that it is still trading above the long
term downtrend line at $ 31.66 area followed by other support at $
31.23 and $ 31.00. In addition, it is trading in an ascending
triangle pattern. The stochastic have turned which suggest renewed
buying pressure. We maintained our neutral bullish stance on silver
and look to target $ 32.47 and then the 2012 - 2013 resistance line
at $ 33.29.
Failure to hold at $ 31.60, we will
short silver with a stop loss at $ 31.75. However, should prices
break above $ 32.00 and maintain that gain then it will be
sufficient confirmation that it can target the January high of $
32.47.
Resistance: $ 32.47 (month high), $ 33.54 (downtrend line), $ 35.35 (October high) Support: $ 31.23 (38.2%), $ 30.60 (200 DMA), $ 29.25 (January low) |
Currencies
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.
06 Feb 2013 | Categories: Gold