Precious Metal Weekly: Paper Money Versus Physical Gold

A better NFP data out of the US gave the Dollar bulls something to cheer about a September rate hike. The pressure is deafening but did not take the index higher than last week’s rally. As we draw closer to 5th of June, the re-allocation of dollar long starts to unwind – taking some of the wind off. With no deal and the option to kick the can down the lane has certainly favour traders to reassert a long dollar sentiment for next week.

Over the weekend, any comments or statement from G7 meetings will be closely scrutinise and next week economic data will range from China CPI and industrial production, RBNZ statement, Australia employment data, US Core retail sales and PPI figures. A fairly modest week that may well support commodities currency should the data be positive and reverse the dollar strength. We are not ruling out a retest at the low for precious metals but we will also keep an eye on the economic data as well as the equity market reaction. Last week sells-off in the bond market seems to have kicked some sense into the market.

Should Greece come to a deal, we then expect a flush of rally in the equity markets. Otherwise, a default down the road is not the option available to the Greek government. Investors could still get in a dollar long stance since there is no Greek deal and equity market will remain under pressure.

Gold Technical Outlook

Weekly Chart

The dollar rally did roll over but throughout the course of the week, we have a spiked higher Monday followed by bouts of selling. Once again, swing trading on gold is difficult in this market and just proves to show that despite fertile environment for a higher gold price – it failed miserably. The low which we initially anticipated, failed to muster any bargain hunters to enter the rally. Instead, the gravestone doji of Monday 1st of June has undone the entire trade. Despite that, we are watching to go long on dips if the environment allows. Otherwise, we could trade short on the break of 1130 levels.

Silver Technical Outlook

Weekly Chart

The fizzled rally has undone the trade and as highlighted in the bullion daily, we switched our stance to short the white metal from 16.60 onwards. Once again, we failed to anticipate the low on Silver but with price action at 15.60 – 16.00 levels then we cannot ignore a possible reversal rally with a tight stop. Only if Silver trade and close below 15.60 then we could well consider a short position.

Platinum Technical Outlook

Weekly Chart

Last week commentary, we highlighted our concern on Platinum which seems to play out throughout the week. The rejection on Monday at 1125 was strong and the sell-off has not stopped. Meanwhile, we will stick with last week commentary but will look for an opportunity to play a corrective rally. Meanwhile, the low from last week may not be the bottom but we might be wrong as 1187.5 could well be the start of a double bottom.

“The next question is – can platinum recover from here and what could be the catalyst? The pullback was more of an impulsive selling with no real interest of short covering or bargain hunting. The 20 WMA previously acted as resistance and current price action should retrace and test it again. However, we are not ruling out a potential selloff to retest previous low of 1086 (even to 1078 – which make the lower BB) before a reversal.”

Palladium Technical Outlook

Weekly Chart

Although it has yet hit the target of 722, Palladium continue to the downside as per our analysis. Any rallies were selling opportunities and sellers continue to dominate in this market. Next set of support at 741 will be 76.8% Fib from previous rally and failure there will take palladium to the 200 WMA (currently sits at 723) as mentioned last week. Weakness may continue and only a doji close for the week or a solid green bar will turn us mildly bullish again.

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