Bullion Round Up

The correction continues on gold and the bears remain in full control. Gold backed ETF product continue to see outflows as hedge funds and retail investors draw their money out and re invest in the stock market. One after another, investment banks are calling for the end of the gold-en era and recommending investors to start shorting the market. Physical buyers remain on the side-line as they wait for prices to stabilise. The general mood of the gold investors remains somewhat sombre due to the lack of positive catalysts that may push gold higher. Previous catalysts such as the Fed quantitative easing could soon be tapered. In addition, the once safe haven asset is no longer deem required as Mrs Lagarde pointed out that the world economy is on the mend and we are far from previous crisis.

Gold continue to trade in the downtrend channel from previous high of $ 1800 and a retest of previous low is in sight. We feel that the correction will continue unless gold managed to break out of the downtrend channel. In addition, we maintain with our argument that a stock market correction could send gold prices higher.

Gold Technical

Better than expected jobless claim data help maintain the stock market rally. Once again, gold suffered and continue to consolidate its recent loss. Prior to the release of the jobless claim data, prices hovered between $ 1554 to $ 1561 areas. After the jobless claim data, prices broke higher on the back of a weaker US dollar. However, gold buyers remain sceptical and maintain a cautious view on another gold rally. Unless it breaks above the 20 DMA at $ 1592, we will remain on the defensive. In the meantime, we will remain cautious and wait for another pullback before adding into our long position.

Short gold at $ 1555 target $ 1525 with a stop loss at $ 1561 (cancelled).
Long gold at $ 1578.50 target $ 1603 with a stop loss at $ 1555.50 (Stop out).
Long gold at $ 1576.00 target $ 1603 with a stop loss at $ 1580.00 (Profit after SL breached).
Resistance: $ 1572, $ 1590.4, $ 1592, $ 1604, $ 1620 Support: $ 1551, $ 1541, $ 1539, $ 1522 (2012 low)

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-6 months)
Flat Bullish Bullish


Silver Technical

It is too early to suggest that silver is trying to reverse its current trend until we take out several key resistance levels. However, we can argue that a bottom in the silver market is not far away. In fact, silver has got a lot of room to the upside should it reverse higher. At the moment, it remains weak and price movement is blighted by weakness in gold. The technical set up on silver remains solid and look stronger compared to gold. We would like to maintain a cautious view on silver and trade it carefully following the advice we mentioned yesterday: If the current reversal trend holds, silver will have the opportunity to retest the downtrend channel at $ 29.30. At the moment, silver will need to maintain the buying momentum and keep its gain.

Long silver at $ 27.45 target $ 27.85 with a stop loss at $ 27.15 – Profit.
Long silver at $ 27.65 target $ 28.20 with a stop loss at $ 27.75 (in progress SL raised).
Long silver at $ 28.45 target $ 29.00 with a stop loss at $ 28.15.
Resistance: $ 28.35, $ 28.87, $ 29.50 Support: $ 26.64, $ 25.97.

Short Term (1 week) Medium Term (1-3 weeks) Long Term (1-6 months)
Bullish Bullish Bullish