Precious Metal Weekly – US Rate Hike Is Weather Dependant

Weekly Picture

A few excerpts from Fed Chief Yellen’s speech that is solely her view and none represent those of the FOMC members.

  • US economy will pick up in the 2nd half of 2015
  • 1st half poor data was a statistical blip and due to severe weather conditions and strikes
  • June rate hike is out, September rate hike is welcome
  • Unemployment and jobless claim data must be scrutinise for any hint of recovery
  • No taper tantrum in the equity market – plain sailing for an all-time high
  • The market may have priced in the gradual rate hike already
  • Dollar kept most of its gain and closed strong for the week
  • A rate hike will come – a matter of when not if

As we approach the end of the 1st half, the dollar index gave up most of the gains made since the start of the year. Current price action managed to retrace higher, sitting on the 50% fib from March high to May low. A higher CPI numbers gave traders the reason to pile back in the dollar, either that or just repositioning since we come to a long weekend followed by the end of the month book squaring.

In this new normal, the 2nd half of 2015 on the dollar index will remain volatile but we may be in for a good show. With interest rate hike still in store in September (depending on data) and other central banks embarking on QEs, it looks straightforward enough to bet for a strong dollar. However, we felt uneasy at that prospect and will not rule out possible Black Swan Event.

Gold Technical Outlook

Weekly Chart

Gold to embark an ambitious rally to $ 1267 is the bold statement we are making and that remain a big potential as we come to the end of May. Our motto remains to buy dips, buy in May and go away with $ 1267 as the maximum target. To achieve that, gold needs to take out previous resistance at $ 1232. On the off chance that $ 1267 is taken out, we envisage possible buying interest to take gold as high as $ 1274 – $ 1288 levels which coincides with previous strong resistance (downtrend line).

Trade: Short stopped out. Looking to build on Pullbacks to capture the corrective rally.
Position Valid Date Price Action Stop Loss Target Results
LONG 18th – 22nd   May 1195-1210 Live 1178 1233
LONG 25th – 29th May 1185-1200 Order Placed 1178 1267
20 WMA 50 WMA 100 WMA
1212 1232 1264

Silver Technical Outlook

Weekly Chart

Weekly price action has been rather encouraging after Silver met strong resistance at $ 17.72 area. The pullback that we have called for is in transition and next week we anticipate further consolidation period to build a strong support. Short term supports are $ 16.86 and $ 16.93 levels but we also have the 20 WMA to act potentially as a strong support at $ 16.67. Once again, we repeat that we would build long should we see silver test $ 16.60 – $ 16.80 levels. Should the AB – CD pattern play out, we envisage a potential rally to $ 18.75 with a pinch of salt.

Our long term view on Silver is for another test lower, probably below previous low of 14.03 while the RSI remain higher so as to confirm that the trend has indeed change. Technically, the weekly RSI suggest there are more rooms to the upside and this run up remains a corrective rally.

Trade: Pullback is still a buy cautious and looks to build short if we reach 17.85 – 18.25 area? Valid for this week only.
Position Valid Date Price Action Stop Loss Target Results
LONG 11th – 15th May 17.15 Live 17.25 (16.50) 17.80 +10
LONG 25th – 29th May 16.60-16.80 Order Placed 16.00 17.80
20 WMA 50 WMA 100 WMA
16.67 17.61 19.09

Platinum Technical Outlook

Weekly Chart

We want to begin by highlighting the commentary we made last week “The move high and recent price action suggests that this run has legs and could have further potential upside. The first sign is from the breakout of the weekly downtrend line at 1150 levels and we would not be surprise if next week retracement to 1140 – 1150 levels happens. If the support holds, this will further strengthen the case for a more potent bullish move.”

Platinum price action played out pretty much as we envisaged. The 20 WMA at 1177 acted as a magnet and strong resistance. Profit taking and rejection to move higher is normal and this pullback is healthy as long as we begin to see buyers to come in again once prices retest for support.

Important Weekly Resistance Levels are:

  • 20 WMA at 1175
  • RSI that might hit weekly resistance at 50 (NOTE that Platinum has not managed to break above 50 in 2015!!!). A POTENTIAL BEAR FLAG FORMATION?!
Trade: Buy the pullback valid for the next 2 weeks.
Position Valid Date Price Action Stop Loss Target Results
LONG 18th – 22nd May 1136-1146 Live 1117 1170 (1185)
LONG 25th – 29th May 1126-1136 Order Placed 1117 1170
20 WMA 50 WMA 100 WMA
1175 1272 1350

Palladium Technical Outlook

Weekly Chart

Palladium remains a difficult market to trade as last few weeks price action suggest a lower high and lower low. Despite our bullish commentary to buy on pullbacks, one of the positions was stop and the short to medium term outlook has changed to neutral. Instead, we are now looking to build small short positions should we see another attempt higher.

Trade: Side line for now with a bias to the downside.
Position Valid Date Price Action Stop Loss Target Results
LONG 18th – 22nd May 782 Closed 770 820-830 -12
20 WMA 50 WMA 100 WMA
779 806 775

This article is written according to the author’s views and by no means indicates investment purpose. Opinions expressed at Sharps Pixley Ltd are those of the individual authors and do not necessarily represent the opinion of Sharps Pixley Ltd or its management, shareholders, affiliates and subsidiaries. Sharps Pixley Ltd has not verified the accuracy of any claim or statement made by any independent writer and is reserved as their own and Sharps Pixley Ltd is not accountable for their input. Any opinions, research, analysis, prices or other information contained on this website, by Sharps Pixley Ltd, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. Sharps Pixley Ltd will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The data contained on this website is not necessarily real-time or accurate. 

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