Short term set up on gold is bullish and inherently we recommend a cautious buy if a breakout of $1290 is given. Prices could continue higher should it break pass previous resistance at $1298 and the psychological level of $1300. Potentially, prices could retest $1321 and short covering rally may push the current rebound higher. Despite that, the medium term bearish perception has not changed. Once the rebound rally is exhausted, we would strongly recommend our readers to short sell the yellow metal again.
Commerzbank Bullion weekly argued that strong resistance will prevail at $1300 and $1321 area. In the meantime, we anticipate higher prices in the short run and will sell the rebound rallies to target previous low of $1180 again.
- Resistance: $1298, $1310, $1350
- Support: $1274, $1247, $1208
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. Short sellers are looking to short at $1318 and $1330 area target remains open at the moment. Stop loss is advice at £1350 area.
Silver continue higher after a weaker US dollar index. We continue to see the dollar index in corrective mode and this could well give the white metal a little more room to the upside in the short term. 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: $20.30, $20.44, $21.59
- Support: $18.20, $18.00
Stay on the side line. Only a break above $21.60 will give the bulls more ammo to retrace higher.
(The author is technical analyst at sharpspixley)