Gold & Silver Technical Outlook 2014-11-27

Gold Futures – Technical Update

Gold futures continued their modest rally from the lows near 1135 handle to rally back towards the main support/resistance level near the 1197 region. From the weekly charts, the appearance of three bullish candlesticks near the bottom is indicative of a correction underway. A weekly close above 1197 could possibly see Gold futures look for further gains in the coming weeks.

The main risk to Gold futures this week is the Swiss referendum due on November 30^th (Sunday). While opinion polls from the referendum is broadly mixed with most of the consensus inclined to reject the referendum, a black swan event could possible tilt the scales in Gold’s favor as well as have major implications in the forex markets as well. Should the vote pass, the SNB will be tasked to increase their Gold holdings by as much as 20% of their assets. This could be done including repatriation of Gold or the SNB sell its reserve holdings, the consequence of which could majorly impact the Swiss Franc as well as Gold.

There are also other voices being raised, from the likes of France, where Marine Le Pen, a Euroskeptic writing an open letter to the France Central Bank to repatriate its Gold assets. Ms. Le Pen and her Front National party is widely seen as a strong contender to the next French presidential elections.

Figure 1: Gold, Weekly Charts (Long Term)

Price action for Gold futures on a smaller time frame currently do not provide any conclusive evidence of direction, indicative that Gold is likely to move in a tight range in the run up to the Swiss Gold Referendum. In last week’s analysis, we had pointed to the H4 rising wedge formed on the Gold futures chart. Price so far has managed to break out from the wedge channel but has continued to stay within a range. As long as prices don’t close above 1207.95, Gold futures could potentially be looking for a decline.

Figure 2: Gold, H4 Charts (Short Term)

Gold Pivot Levels

	R3	R2	R1	Pivot	S1	S2	S3
Weekly	1246.5	1227.22	1213.74	1194.46	1180.98	1161.7	1148.22
Daily	1208.41	1205.14	1201.53	1198.26	1194.65	1191.38	1187.77

 

Silver Futures – Technical Update

Silver futures price action seems to be closely tracking Gold prices. The weekly charts show a second week of continued bullish momentum, however last week’s price action resulted in a doji candlestick formation. Unless we see a clear bullish or bearish candlestick pattern for this week, the indecision is likely to continue.

Figure 3: Silver Futures Weekly Chart

The daily charts for Silver futures shows the bearish flag pattern that has been formed and the eventual break out from the flag. Current price action should ideally be looking for a retracement to either 16.82 or possibly towards 17.16 before price can drop any further.

The minor down sloping trend line shows price breaking above the trend line. So if Silver prices fail to break below the trend line, we could expect to see a retest of the trend line and a rally to either of the two price levels mentioned.

Figure 4: Silver, Daily Charts

Silver Pivot Levels

	R3	R2	R1	Pivot	S1	S2	S3
Weekly	17.44	17.03	16.72	16.31	16	15.58	15.27
Daily	16.84	16.77	16.64	16.57	16.44	16.36	16.24