Not easy to accept but gold bugs may have finally face the music and look at reality. Despite what many long deemed it as safe haven assets, it is time to move on and accept the fact that the yellow metal has lost long term fans and its appeal. There are a small minority that has yet to give it up as they defined long term as in 10 to 20 years but recent price action suggest that weak hands will need to leave the arena. The low in 2015 at 1131 may not be the final low as the bears entice with previous low at 1129 levels.
It is a classic end of the week low that put the small pool of longs in a real dilemma and as panic kicks in, a Monday sell off cannot be ruled out. Sooner or later the low will cave in and a new low created as many banks have wished and predicted to happen since 2013. Do not be surprise at headline report that include “I told you so” playing throughout weeks and even months ahead.
Fundamentally, central banks – Federal Reserve and Bank of England have indicated the need for a rate hike as imminent as this year. By spearheading their intent, the US dollar and Sterling pounds are two key currencies that will go from strength to strength with other central banks perched on relentless QE programmes of their own. No matter what calamity or crisis that happened in 2015, the sharp recovery of the stock market has indeed left many baffled and many have bought to join in the money flow. China banned short selling for the last 2 weeks meant that government intervention in the global economy is the only way out of this made up paradise (hell hole to be exact). With Iran deal done and war averted, what value is there for gold to hold for fellow investors? Economic miracles do happen and it seems that there are many more to come in the months ahead.
If you have been following our coverage of the dollar index on a weekly basis, take no surprise at the change in view as often as the Fed has shown in many occasions. For an instance, there were clues from Miss Yellen that the dollar is strong but it is not something that she wants to comment – dollar dived but later recovered on a strong remarks made on possibly having 2 rate hikes before the start of 2016. With that in mind, a September and December rate hikes is all possible timing. Until the announcement is made, expect the dollar index to remain strong.
A technical breakout of the symmetrical triangle indicates potentially a thrust higher and should the index reclaimed with a close above the 76.4% fib retracement, it has the potential to retest previous high.
Gold Technical Outlook
As per last week commentary, we lined up 2 potential scenarios with the sellers continue to dominate the playing field. However, we are not sure if this is the final purge or flush as the bears are so very close to take out 2014 low. We cannot rule out a double bottom if 1131 holds and a relief rally start from here. A relief rally scenario will have gold target the 20 WMA as first resistance followed by the 50 WMA. A break below 1123 will create panic selling but also bargain hunting as we trade closer to the psychological level of 1100. Any more selling below 1100, we will have 1085 and 1061 as potentially key support levels indicated from as far back as 2010 price levels.
| Position |
Valid Date |
Price |
Action |
Stop Loss |
Target |
Results |
| LONG |
13th – 17th July |
1145 |
Closed |
1135 |
1200 |
-10 |
| SHORT |
20th – 24th July |
1183 |
Order Placed |
1193 |
1143 |
|
| LONG |
20th – 24th July |
1123 |
Order Placed |
1113 |
1183 |
|
Silver Technical Outlook
Silver failed to break above 20 dma and as written per last week report, selling continues. A retest to break below previous low is underway but failure to do so increase the chance that sellers are fast running out of ammo to drive prices lower. Lookout for a possible reversal play in silver that can very often be explosive but the sentiment remains to sell any rallies.
With the RSI indicator breaking below, the long term trend line (purple) is under real threat if price fail to bounce. Other possible scenario is a potential double bottom at 13.99 but watch how price continue to drift within the downward channel (blue trend line) which open the gate to a potential $ 12.00 silver (2007 and 2009 all over again).
“Failure to break above 20 dma could mean that additional selling is underway. “
| Trade: Long on the break and close above 20 dma. |
| Position |
Valid Date |
Price |
Action |
Stop Loss |
Target |
Results |
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Platinum Technical Outlook
We covered the potential flush lower in platinum and the chart showed a replica move from the beginning of 2015. The intention to sell and sell is clear in this bear market. RSI is at an oversold territory which could see a relief rally in the next few weeks developing. However, we cannot rule out much lower prices.
Lower timeframes are all showing RSI bullish divergence which could swing in favour of obtaining a long position is very much more favourable in the short term.
“We are not ruling out a retest of 1009 level or even the psychological level at 1000 before we see any meaningful reversal.”
| Trade: Swing long at 1001 level with tight stop |
| Position |
Valid Date |
Price |
Action |
Stop Loss |
Target |
Results |
| LONG |
13th – 17th July |
1001 |
Live |
991 |
20 WMA |
|
Palladium Technical Outlook
Palladium revisited 2013 low and broke lower and trading currently around September 2012 confluence zone. We did mention last week a potential bull flag on the monthly chart this could continue in play with a potential target of 578.8 for palladium. Yes 578.8 and you do not have to rub your eyes to believe it.
| Position |
Valid Date |
Price |
Action |
Stop Loss |
Target |
Results |
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