Commodities | Apr 04 2013
Gold succumbed to some profit taking as it broke through support at US1590. It feels as if investors continue to take off bullish gold positions in favor of US equities. Tuesday night was a classic example for this as beneath the market we had some significant stop loss orders. Once triggered down it came [and again last night].
It is probably a good idea to re-look at the silver market as it has been in the doldrums. On Tuesday night it tested levels not seen since June last year and if the bull market for the metal is to remain intact then we really need it to hold onto these levels. US26.00 to US37.00 has been the range for the last eighteen months and as we test the lower end of the range we need to see proof that it will hold.
It is interesting to see that physical demand via coins for the commodity remains robust yet spot prices remain weak. The same manifestation occurred in late 2008 before the trend higher to US50.00 commenced. The reason we can think of is that we have had, up until recently, enough supply of old stock as the market has been falling to which refiners have not yet started to replace or can only replace to a finite capacity. If the demand remains robust for the coins then not only will it trickle down to demand for physical but reignite the old cycle where finite production will aid a recovery in prices from there lows and see the dawn of a string move higher at last.
We continue to hold onto both metals however in a limited capacity, although granted we have taken some profit in gold. If you placed stops at US1590 then it was a small loss when compared to where the market is now trading.
Chart Point – Gold:
Technically, Gold broke US1590 and as such goes back into consolidation mode. The move through US1615 and then on towards US1640 has been thwarted for the time being.
On silver we continue to monitor for signs of an eventual break to the topside and we still wait for a clear break above US29.30, which potentially opens the way for further gains. However will review this as the market falls. The chart remains positive however momentum indicators are calling for more downward price pressure.
Edited by Jonathan Barratt, Barratt's Bulletin is a weekly subscription newsletter that provides expert analysis of commodity markets, global indices and foreign exchange movements. Click here to take a no obligation 21-day trial to Barratt's or to learn more visit www.barrattsbulletin.com. Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
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