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Gold & Silver; Welcome September

Today we expect lacklustre trading activity as the US market is close with their long weekend holiday. However, we expect a busy week and month as traders are back from their summer break. Most traders will either take cue from the up and coming economic data. The subject on Tapering will be the headline for the Federal Reserve meeting on the 17th - 18th September. US dollar index has also garnered some buying interest and reaction from the equity market may increase volatility in the market. Trade wisely and carefully, expect the least expected with geopolitical concern in the background to be considered as well.

Economic data that we will be watching closely this week are:
USD - ISM manufacturing Index (exp. 54.5 / pre 55.4)
GBP - Service PMI (exp. 59.0 / pre 60.2)
USD - Trade Balance (exp. -38.2B / pre -34.2B)
USD - ADP nonfarm employment (exp. 187k / pre 200k)
GBP & EUR - Interest Rate Decision (unch)
USD - Nonfarm Payrolls (exp. 175k / pre 162k)

Gold Technical Outlook

Daily Chart Gold is trading within a healthy uptrend channel line as shown on the chart below. Only a break and close below $ 1353 will allow the bears more control to retrace lower and test previous outbreak level at $ 1275 area. As long as gold trade above $ 1353, the longs will keeps the trend going.

Resistance: $ 1434, $ 1445, $ 1475 Support: $ 1393, $ 1371, $ 1353

Traders Notes: Short at $ 1345 stop $ 1353 target $ 1300. Long at $ 1355 stop at $ 1348 target a rebound to $ 1430.

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6- 12 months)
Bullish - target 1475 Bearish - target 1353 Target $ 1500 / $ 1600

Weekly Chart The concern for the gold bulls is the potential end to this corrective rally. Last week close shows a weak candlestick formation which could suggest potential reversal. The stochastic fast line is reversing lower while the RSI hit resistance at the 50 mark. MACD may have crossed a tad higher but it is still rolling in the negative zone. If gold managed to close higher ($ 1422 - $ 1430), a retest of resistance line at the weekly 200 DMA - $ 1472 is in the cards, followed by a possible pullback. The weekly chart remind us that gold continue to trade in a Bear market and only a substantial break above $ 1500 to call the end of the correction in the Bull market.

Silver Technical Outlook

Daily Chart After a successive rally, silver look poised to pullback and the daily chart painted a very nice setup for the white metal to retrace lower. Previous close after a blown-off scenario at $ 25.12 has given the signal for profit taking followed by shorting the metal. Pullback to retest support at $ 23.00 or lower could be in the cards. The MACD is about to cross lower and the volume confirms a falling demand as prices set to see more pullback. RSI has also crossed lower and has got more rooms to the downside. The stochastic fast line has already crossed lower while the slow line is still holding on.

Potentially, a break below $ 22.25 will complete a head and shoulder pattern in the next few weeks ahead. We have the left shoulder and the head is complete but a right shoulder could be in the making.

Resistance: $ 25.12, $ 25.40, $ 26.79 Support: $ 23.70, $22.80, $ 22.20

Traders Notes: Short on a break of $ 23.60 target $ 23.20, $ 22.80 and $ 22.60

Short Term (1 - 3 weeks) Medium Term (1 - 3 months) Long Term (6 - 12 months)
Consolidating Expect consolidation to retest support at $ 22.70 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. 

02 Sep 2013

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