Paper Money VS Physical Gold

The picture that sends a chilling reminder

A better NFP data out of the US gave the USD 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.

Trade: Is 1162 the low? A retest next week as confirmation. Long but with tight stop.
Position Valid Date Price Action Stop Loss Target Results
LONG 18th – 22nd   May 1195-1210 Closed 1170 (1178) 1233 -30
LONG 25th – 29th May 1185-1200 Closed 1170 (1178) 1245 (1267) -20
LONG 08th – 12th June 1157-1165 Order Placed 1151 1182
20 WMA 50 WMA 100 WMA
1206 1228 1263

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.

Trade: Pullback is still a buy. Valid for this week only.
Position Valid Date Price Action Stop Loss Target Results
LONG 25th – 29th May 16.60-16.80 Closed 16.00 17.50 (17.80) -0.70
LONG 08th – 12th June 15.70-15.90 Order Placed 15.50 17.20
20 WMA 50 WMA 100 WMA
16.60 17.45 19.04

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.”

Trade: Look to play a corrective rally. Valid for the next 2 weeks.
Position Valid Date Price Action Stop Loss Target Results
LONG 08th– 12th June 1066-1071 Order Placed 1060 1150
20 WMA 50 WMA 100 WMA
1161 1258 1345

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.

Trade: Look to long at a bounce at 735 – 740 levels to target 770 levels.
Position Valid Date Price Action Stop Loss Target Results
LONG 08th – 12th June 735-740 Order Placed 727 770
20 WMA 50 WMA 100 WMA
778 803 777

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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