Silver: A Good Bet For The Long Run

As the negotiation continues between Cyprus government officials, gold continues to be a prefered safe haven. Initially, gold moved lower after a better than expected US housing data. The yellow metal then moved higher, taking out yesterday's $1611 high. The new resistance stood at $ 1614, followed by $1620 which will be an important resistance to take out. Should gold fail to do so, it remains vulnerable to selling pressure after months of negative sentiments.

Investors will be waiting eagerly for today’s FOMC statement as well as the speech from Mr Bernanke. Gold price may be dictated in the late European trading hours, as speculation and rumors will be rife. Media attention will quickly shift to the U.S. We expect Ben to be proud of the work that the Fed has done in stimulating the economy, and he will continue to do so until the economy can sustain itself. He will also highlight that improved economic data is encouraging, and that the stock market rally is pre dominantly normal. We assume that he will not mention the QE programme tapering .

Should we break $1620, we could see a quick rally to test $1650 and $1700.00.

Long gold at $ 1620.00 target $ 1630 with a stop loss at $ 1611.50.
Resistance: $ 1615, $ 1625, $ 1634 (50 DMA), $ 1650, $ 1686, $ 1697 (previous high)
Support: $ 1603, $ 1600, $ 1584.86, $ 1580.39, $ 1522 (2012 low)

After last week test of support at the low of $ 28.55, silver has reacted rather like a headless chicken. It has not been able to command higher prices above the previous March high at $ 29.35. It has stuck in a wide range of $ 28.50 to $ 29.20 once again. The 4 hourly charts look rather plain, as the stochastic fast line tried to break higher again while the MACD continues to roll flat.

Silver will be a good bet in the long run, as the Daily chart paints a rather bullish picture. There has been several positive hammer tails which suggest buying interest exists at $ 28.50, and a bottom is already in place. It needs more buying momentum to push for higher prices. We are concerned at the lack of volume.

We advise caution on any silver trade, and will only get more bullish if $ 29.50 is given.

Long silver at $ 29.40 target $ 29.80 with a stop loss at $ 29.15
Resistance: $ 29.50, $ 29.74 (38.2%), $ 30.19 (50%)
Support: $ 28.60, $ 28.33, $ 27.93, $ 27.50