SHARPS PIXLEY Gold and Silver consolidate further - Upside remains intact?
Chinese better
than expected manufacturing numbers, expanded at the fastest rate in
two years. The index rose to 51.9 in January compared to 51.5 in
December. Meanwhile, Japan logs a record trade deficit in 2012
according to the Japan Ministry of Finance. Overall exports fell by
5.8% in December from a year earlier due to the on-going island
dispute between China as well as a strong Japanese yen for a good
part of 2012. It was not all business in Asia as North Korea launch
another nuclear threat, this time to target the US.
European market
started with a flurry of poor data from the French PMI that was below
expectation and Spanish higher unemployment rate at 26.02%.
Initially, Euro sell off on the back of the poor data but then
regained grounds after a better than expected Germany PMI numbers.
Such disparity is a major concern and could well paint a confirmation
to IMF’s prediction for the Eurozone in 2013.
Gold
Short Term: Gold
prices was testing to erode its previous January high of $ 1697 for
the 3rd consecutive times but failed and retraced back -
initially found support at $ 1683 before heading lower. It then found
support at $ 1669 area which was the 38.2% retracement from January
low of $ 1625. Analysts deemed this as a bout of technical selling
after prices failed to break above the key technical resistance
level. We did warn on our last commentary, should gold failed to take
out its previous high then a bearish sentiment will set in.
Medium Term: The
current support level on gold is at $ 1669, $ 1661 and $ 1653
respectively. At the moment, the chart pattern indicates profit
taking as well as weak long hands getting out of the market. Only if
the price breaks lower than the 61.8% retracement level at $ 1653, we
will be bearish.
|
The positive in flow in gold ETFs,
Russian central bank continuous buying of gold to diversify as
well as the nuclear threat from N. Korea does not seems to carry
that much weight on gold prices. We are at best neutral on gold
and look to only buy in a dip.
Resistance: $ 1695, $ 1696, $ 1697 (previous high), $ 1700, $ 1710 (50% retracement from Oct high) Support: $ 1669, $ 1661, $ 1653, $ 1625 |
Silver
Short Term:
Meanwhile, silvers prices rallied to a new January high of 32.50 but
unable to sustain the gains. The selling escalates after the Asian
trading hours and silver prices found support at the 23.6%
retracement level and currently sitting at $ 31.72. Further support
is available at 31.60 (previous breakout level), $ 31.23 (38.2%
retracement line). As per our last commentary, we locked in our
profit at $ 32.05 as failure to hold on to its gain and the $ 32.00
is a major concern.
Medium Term: The
chart pattern did not paint a very bullish picture on silver after
its attempt on the January high of $ 32.47 level. Profit taking and
some long liquidation took place and silver will have to consolidate
further. We argued that silver has got the potential to find support
and retest to take on its previous high. It may just need a little
time to catch its breath.
|
At the moment, standing on the side
line seems a better option and only join in the market once we see
some dips.
Resistance: $ 32.47 (month high), $ 33.54 (downtrend line), $ 35.35 (October high) Support: $ 31.74 (uptrend line), $ 31.23 (38.2% retracement), $ 29.25 (January low) |
Currencies
| Currencies | Value | Change comment |
| Euro | 1.3372 | The Euro put up a positive day and reached a high of 1.3393 on the back of more upbeat views of the Eurozone. We have a positive German PMI numbers that propels the market higher. |
| AUD | 1.0458 | Technical selling on the AUD after failing to hold on at 1.0500 |
| JPY | 89.97 | It does not come as a surprise after a dismal export figures. In addition, there were more remarks by PM Abe insisting BOJ to fight deflation head on. Expect JPY at 90.00 - 95.00 in the next few months. |
| US Index | 79.93 | The US dollar is relatively strong and in fact gained a high of 80.15 after the better than expected jobless claim data. |
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.
