Precious Metals: New Low Imminent

Reality against media speculation – such disparity is growing each week across the developed economies. High unemployment and depressed income level remains the new normal albeit a slow and steady growth. Despite that, main growth from the service sector continues to serve as a temporary barometer which highlights a slight green and healthy indicator.

Demand among the growing middle class remains stifled despite cheap credit from banks. With low oil prices and other accommodating situation, real income remains depressed as consumers look to save than spend – thus stifling any real demand. The economy continues to oversupply with large swath of debt, growing much bigger than the 2008 debt level.

We continued to see lower prices across consumer goods in order to attract higher demand. Central Banks around the world are doing what they can by cutting interest rate to stimulate the economy as we are about to hit the first quarter of 2015. Racing down the hill of devaluation and growing concern on deflation, 2015 will be a challenging year for fund managers in search for higher yield. It is no secret and soon becoming a norm that currency and fiat paper money are losing its value – fast!

The ongoing prospect of a stronger than normal USD, will play a significant role in debasing other currencies thus causing significant change in trade balance.

Any indication from the Federal Reserve to further delay a June rate hike looks slimmer after a stronger than expected economic data. However, we felt that Q2 economic data to June of 2015 may paint a completely different picture that may swing this big pendulum to the other side of 2016 instead – beware USD bulls!

Gold Technical Outlook

Our previous report published 02/03/2015 - Gold Targeting $1168? hit the nail right in the coffin. A stronger than expected economic data lend hands to a strong US Dollar Index, fuelling a flurry of selling on the yellow metal. Previous support at $ 1196, $ 1191 and $ 1189 broke and gave way to lower numbers. Gold has been trading lacklustre, not showing any real direction as traders wait for a confirmation from Non-Farm payroll data.

The trading week ends at $ 1168 which is the 78.60% Fibonacci retracement of previous rally and this is also strong support zone created back in December 2014. With a long red body on the weekly chart, we cannot discount the fact that the bears could try to attack previous support $ 1140 as well as previous low at $ 1130. Expect a small rebound but sellers will continue to dominate.

Silver Technical Outlook

Silver broke the weekly RSI uptrend line, further confirming our fear that it could retest lower prices. Other indicator such as MACD and Stochastic are heading lower with more selling to come. The following support area at $ 15.47 (which is the 78.60% Fibonacci Retracement area) could be the next target for the bears to overcome. Weekly Bollinger Band at $ 15.15 area could provide significant support as it reaches the previous downtrend line created since 2010.

Platinum Technical Outlook

Platinum suffered with the rest of the precious metal complex after consolidating to retest resistance at $ 1192 (creating a bear flag) before a plunge to test $ 1154 area as suggested in last week commentary ” the stochastic fast line could move higher if prices buyers flock in to test $ 1196. Next week could see further consolidation as the shorter time frame (4 hour chart) has resistance at $ 1192 area. Potentially prices could return to test $ 1154 area.”

Resistance is now at $ 1183 which is the 20 daily MA while we expect some sort of a weak rebound.

4 hour chart – will $ 1151 create a strong support for a short term rebound to test $ 1178?

Palladium Technical Outlook

Look for a pullback as the weekly candlestick is a gravestone doji which could indicate that the bull tried to take the price further but failed. Respecting the major trend line on the weekly chart as well as the break above the Bollinger band further indicate that resistance stands at $ 831.80 and a pullback is due. Should the pullback escalate in this bullish trend, we will look to short at the open and target the 20 MA sitting at $ 795 to $ 789 area.

Should support fail there then the pullback to the lower range of the trend line at $ 755 will be a major test to the bull.

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