Precious Metal Weekly – Collateral Damage

Given the current situation prevailing in the Eurozone – we ponder upon several questions as follows – Greece seeking for a third bailout but will there be a follow up bailout? Who will bear the most burdens on the additional bailout? Maybe Germany considers an exit themselves in the not so distant future? What happens when EU masses has a referendum on keeping Greece in or out of the Eurozone? Eurozone is essentially a network of countries kept intact to create peace and prosperity but given its interlinked relationship, Greece is dragging the rest down.

Last week China had a brief taste of what is yet to come if a real financial calamity unfolds. The easy way out is to provide more stimulus and do whatever it takes to avert a crisis. With majority of the investors being retail traders, the masses could revolt and create social unrest should the stock market tanked. A last resort government intervention is very much needed to stabilise and boost confidence in the market once again. Such superficial intervention will have a brief effect and not without the consequences that has yet to come. Meanwhile, that is very much for the distant future generation to worry.

Our financial system continues to thrive under the false pretence of future growth and promises of future wealth – created simply by the creation of debts that the present society will not and could not pay. So the word “future” is actually cannibalising and penalising our future generation to pay for our debts. Agree or disagree?

Let us all face the hard cold facts in our current economy. Without easy monetary policies, the system would have a hard landing that could lead to a world war 3. The alternative is to keep the music running and solve the problem later in the future.

Dollar index continue to trade within the symmetrical triangle formation and last week price action hit resistance and could undergo a pullback to 11810 levels in the next 2 weeks. Safe haven trade has taken the index higher but it is becoming harder to justify a long dollar position as the last FOMC remarks remain dovish for foreseeable future. We have highlighted both the daily and weekly chart that shows the probable direction of the dollar index.

Gold Technical Outlook

Selling continues with hedge fund piling on additional short positions at all-time high. A short squeeze could be in the cards but we cannot rule out the following scenarios. We may have a triple bottom and solid support at 1140 levels which could begin a relief rally. On the other hand, we could and may have a final flush to retest previous low of 1130 levels but failure to find any support there will lead to a test of the down trend channel line (purple). A Grexit could see escalation of buying or selling but we take into the consideration that gold does not trade as safe haven assets or as a commodity but rather a financial instrument.

Trade:  No positions
Position Valid Date Price Action Stop Loss Target Results
LONG 21st – 26th June 1175 Closed 1150 1232 -25
LONG 21st – 26th June 1185 Closed 1150 1260 -35
LONG 13th – 17th July 1145 Order Placed 1135 1200

Silver Technical Outlook

As per last week commentary, we were stopped out on the long trade but did not have the opportunity to flip short. We did however; cover the potential scenario if the break below 15.40 could create (see below).

Silver continue to sell off and it has reach a critical juncture of make or break. Break below 15.40 and 15.20 then we will get a flush to find support at 14.60.

After the flush, Silver did thrust higher. Technically, it could break higher only if it close above 20 dma and potentially target the 100 dma. The RSI is oversold thus a relief rally may play out in the next 2 weeks. Failure to break above 20 dma could mean that additional selling is underway.

Trade: Long on the break and close above 20 dma.
Position Valid Date Price Action Stop Loss Target Results
LONG 08th – 12th June 15.70-15.90 Closed 15.30 (15.50) 17.20 -0.40

Platinum Technical Outlook

Last week commentary summed up the potential price action after the failure on platinum price action to trade higher. A flush lower did bully prices to test 1030 levels and it broke to a 2015 low of 1009. We are not ruling out a retest of 1009 level or even the psychological level at 1000 before we see any meaningful reversal.

Trade: Swing long at 1001 level with tight stop
Position Valid Date Price Action Stop Loss Target Results
LONG 13th – 17th July 1001 Order Placed 991 20 WMA

Palladium Technical Outlook

It was indeed a temporary low at 660 levels as the selling continues to hit 629.3 as 2015 low. We want to highlight both the monthly and weekly chart that show an interesting view of a possible long term low. We could be wrong but the technical indicators are shouting an oversold price action and a relief buying is overdue. Palladium could embark on a potential bull flag formation on the monthly chart as shown below.

Trade: The risk reward has changed in favour of longs.
Position Valid Date Price Action Stop Loss Target Results

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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