Monday, April 7, 2014

Gold & silver; Where is the Chinese demand?

By Andy Farida

Chinese Whispers on a potential strong demand from mainland China, but that demands remain elusive and countered with further selling. Technically, the yellow metal is oversold but with prices will remain weak if there is no spark of buying frenzy. It remains doubtful if there are any demands that could bump the price of gold higher. Shorting the yellow metal seems to be the better option as traders look into the next quarter with rising interest rate from central banks. Continued straining of monetary policy will play a key role in the demand to buy gold as an inflation hedge. However, concern remains on deflationary pressures that are building up in Europe. For all we know, the turbulent Japanese economy could play a nasty part to destabilise the global economy should Abenomics failed to raise that inflation rate.

Gold Technical Outlook, Weekly Chart

The next solid support on gold should it break $ 1,266 will be $ 1,244 area. Failure to hold that will indicate further selling and a return to $ 1,180. Unless it can break above the downtrend line, our current projection remains to the lower end of $ 1,100. The current price at $ 1,285 needs to build a few more layers of support and only a retest of $ 1,276 will give the bulls some confidence. Another retest at lower numbers, $ 1,277 or $ 1,266 may be the opportunity for bargain hunters to enter the market. Further buying at $ 1,295 will then allow the bulls to break higher to retest $ 1,330 area.

Resistance: $ 1,300, $ 1,329.50, $ 1,355 Support: $ 1,244, $ 1,266, $ 1,278

Traders Notes: Buy on support at $ 1,271 stop at $ 1,261 target $ 1,292

Short Term (1 – 3 weeks), Bearish $ 1,255; Medium Term (1 – 3 months), Bearish $ 1,200; Long Term (6- 12 months), Target $ 1,550.


Silver is building some solid support at $ 19.55 to $ 19.75 area. A sudden surge in demand could see prices rising higher and retest several key resistances. However, prices will remain capped in this downtrend line but we see higher prices in the next few weeks once the moving average crossed higher. Prices need to dictate this pace first as we have seen in many occasions.

Resistance: $ 20.09, $ 20.50, $ 21.48 Support: $ 19.50, $ 19.67, $ 19.77

Traders Notes: Should the price stabilise and found support at $ 19.50, buy with a stop loss of $ 0.30 to target the downtrend line at $ 21.40.

Short Term (1 – 3 weeks), Flat; Medium Term (1 – 3 months), Flat; Long Term (6 – 12 months), Bullish – a potential bull run?

Silver Technical Outlook, Weekly Chart

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