Gold And Silver Asking For Direction

Gold continues to trade in the range of $ 1440 to $ 1488 and rebound higher to retest $ 1468, after a retest to previous low at $ 1440. China's insatiable physical demand has helped to support a higher gold price despite continuous ETF outflow. Technically, gold continues to trade in the uptrend line basis on the daily chart and put up higher prices on the back of a weaker U.S. dollar index on Wednesday. The rally remains capped as the equities rally continues to take the shine off precious metals. Should we see a slight correction in the equities market, gold could potentially benefit to retest the resistance level at
$ 1488.

We would like to repeat our advicethat the gold market could see a possible slowdown in physical demand, which could weaken gold rebound. In addition, continuous outflow of funds from ETF only increase selling pressure. Investors who are still holding will be wary of another margin call.

Resistance: $ 1488, $ 1496, $ 1525
Support: $ 1440, $ 1425, $ 1404, $ 1325

After better than expected Chinese data, Silver rallied to $ 24.08 but failed to keep its gain. Prices faltered lower and traded at the $ 23.80 area. The positive takeaway is that silver rebounded from Tuesday's low of $ 23.48, posting a higher high and higher low. The white metal continued to consolidate, but the longer it takes to do so, the more vulnerable it will be for short sellers to add pressure. Despite a weaker U.S. dollar index, silver did not manage to take full advantage of it.

The rebound could be on its last leg, and a break below the lower trend line (Daily Chart) could spell more downside pressure on the white metal. The market remains bearish; this rebound could prove short lived as the speculators are positioning for more price weakness over the next few weeks.

Resistance: $ 24.82, $ 24.91, $ 25.59
Support: $ 23.26, $ 22.88, $ 19.00