Gold and silver weekly technical review and commodity tips

Gold and Silver Weekly Technical Review and Commodity Tips

Gold Commodity Besides, there are several other market dynamics also playing in the market.

Post the Fed testimony, Yellen’s comment on the economic growth and continuous cut down in the asset purchase programme in the US has pushed the USD index to revive strongly higher from the multi week’s low and at present trading at 79.741. We believe US’s response over the economic stance may continue to weigh on the bullion market by which the entire precious metal group may remain under pressure. The dollars denominated other precious metals also and likely that they would extend their loss in the near term by which gold may also remain lower. On a contrary, while we look at the economic data from the US for the next week we expect most data to come positive for the country by which the risky assets may move higher.

Now, developing a relationship with equity and risk free asset i.e. Bond yield, any improvement in the economic data may drive equities higher while the 10 year bond yield may perform inferior. In this regard we may see an unstable movement in the precious metal that is gold.

Possibly this scenario might also push the gold prices higher anytime in the near future and by which the expected downside potential may be limited. This may also be a risk to our bearish outlook on gold while Ukraine tension may continue to be a concern in the global market.

Looking at the above scenario we believe the commodity may trade down while volatility is certainly likely to see in the underlying. From the derivatives front, we have seen a marginal decline in the prices while both volume and open interest have also declined a tad. This indicates for the near gold trend may remain lower while any abrupt event could spoil the existing trend. Lastly, while we look at the implied volatility of GOLDUSD we see that due to steady price movement with a bearish trend the volatility is lowering indicating that the underlying may remain in line with the existing trend meaning the prices gold may trade down.

As of Friday the implied volatility for GOLDUSD holds at 13%.

Gold Mcx June Commodity futures prices witnessed downside fall in the last week. As of 9 May, 2014 prices are trading at 28525, down by 1% from the previous week’s close. For the week ahead prices are expected to remain downside as long as 29050 holds. Immediate support is seen at 28400 levels. Break below 28400 could lead the drop to extend towards 28200 levels.

For short term traders we suggest selling at higher levels Gold Weekly Trend: Sideways Gold Support at 28200-27800 Gold Resistance at 29300-29700

Silver while there were ups and downs in the whitish precious metal last week, as with the case with gold; overall trend continued to support negativity. Silver prices have been on a continues downtrend since the recent peak of over $22 per ounce in the month of February as per Comex markets while the latest low was witnessed in the past week of around $19.10 per ounce.

While as also stated earlier, silver as a commodity takes broad cues from movement in gold which too has been on a downward spiral for long time now. In the past week, we had maintained a selling stance on the commodity wherein July month Comex prices recorded a slippage of 1.8% to $19.20 per ounce meanwhile it also underperformed the move as equated to gold commodity which was lower last week by nearly 0.8%. The commodity did saw some optimism seeping in, particularly in the initial sessions of trade though ease of tensions in Ukraine region and negative momentum into the Euro currency pulled prices lower. Silver’s inherent weakness owing to subdued demand is one of the key reasons behind its continued underperformance notwithstanding the fact that silver derives a mix of consumption from industrial and precious metals. With the recent industrial related data points remaining stable to positive from US and Europe and base metals too advancing moderately, silver should have had got some support in its price movement though the same scenario has not been playing out lately.

During the next week, while there are a number of economy related updates due from the US and Europe, we believe most of them to maintain stand stable to optimistic meanwhile continue to add negativism over the Bullion complex as a whole including silver. While concerns regarding problems going on in Ukraine remain as there are fresh tensions arising after separatists group named ’Donetsk People’s Republic’ have asked for a vote on Sunday i.e. 11th May to become an independent republic, a probable stride towards amalgamation Russia.

Donetsk is the most populous region of the country, with 4.5 million people and the industrial backbone of Ukraine. Insurgents have apprehended government buildings in a dozen of cities and towns, and fight with government crowd. It is highly likely that tension is going to escalate during the initial days next week and might drive some gains in Bullion complex. While broader trend for silver remaining lower, we suggest selling the commodity from higher levels Silver Mcx Commodity July futures prices witnessed downside movements in the last week. As of 9 May, 2014 prices are trading at 41453, down by 2.3% from the previous week’s close.

Prices are likely to continue its downside journey for the week ahead. Key resistance level to watch for the week is at 43455 (previous week high), which is expected to hold the downside view. Downside potential is seen until 41200 levels initially. A significant break below 41200 could lead the drop to extend towards 40600 and then 40300 levels. For short term traders we suggest selling Silver Weekly Trend: Down Silver Support at 41,000-40,000 Silver Resistance at 43,000-44,200 Commodity TIps Gold Mcx June Sell at 28670-28700 SL 29030 TGT 28300-28050 SL 29030 Silver Mcx July Sell at 42000-42100 SL 42950 TGT 41300-40600