Yesterday price action proves rather similar as the start of the week. Asian market pushed gold higher and once Europe and the US enters, price advanced stop in sideways trading. We maintained our view from our previous commentary that “The rebound in gold prices must be treated cautiously – rising prices could just be a smoke screen to what could be coming next”. We need to see more evidence of selling exhaustion before taking any long positions. With the rally in US dollar pretty much intact, it is far too risky to buy the yellow metal. Shorting the metal is far more favourable as it could retest $ 1180 and should it break lower, we see $ 1155 as the next target. With the build-up to the FOMC statement release, prices will be a lot more volatile and further short covering could be in the cards. However, failure to take out $ 1269 by tomorrow could prove that a retest lower is possible.
- Resistance: $ 1260, $1269, $ 1300
- Support: $ 1207, $ 1200, $ 1180
Dip buyers are cautiously buying with a stop loss at $ 1150 – buying area is $ 1180 / $ 1200 / $ 1225 to go long. Expect a short period of short covering before the market resume lower.
Surprisingly, a strong dollar index did not force further selling in the Silver market. Recent safe haven buying in gold has help support the white metal above $ 19.00 level. However, the downtrend still persists and we fear that the rebound will be short lived. Any rallies must be sold but we are also aware that the market is near a bottom before it looks to consolidate in this downtrend. With gold prospect being negative, Silver prices fare no better in the short and medium term.
- Resistance: $ 20.11, $ 20.44, $ 21.59
- Support: $ 18.20, $ 18.00
Stay on the side line.
(The author is associated with sharpspixley)