Precious metals and to be precise - Gold, has been trading in a tight range since the last couple of weeks, underpinned by a series of US economic releases and renewed optimism over global growth that has reduced investor appetite for the yellow metal. The outbreak of positive reports has lifted the US equities as well. Optimistic global economic outlook usually diminishes the bullion’s safe haven appeal and makes it cheaper.
In the near future gold is expected to range between $1651- 1700 and any of the side breakouts would create a new range for the yellow metal. Silver too is expected to range within a mild negative bias. Close above the reaction high crossing at 32.485 are needed to renew the rally off January's low. Close below last Monday's low crossing at 30.745 is the next downside target.
Gold Prices floated above $1670 per once Wednesday morning. Gold traded in a tight range of $ 1675 and weakened to $1670 area. This was due to the prevailing uncertainty in the Euro zone. However, I do not expect a very high or very low range for gold thus remaining neutral and would advise to look to trade according to the direction of the market. Gold price remains stuck but technically, it is setup to rise but bouts of profit taking capped upside movement.
Moreover Gold has lost its shine as investors are moving to other conventional assets like equity that have recently shown strong performances. Safe-haven assets have performed fairly poorly as expectations of growth have improved. A lot of those debt-related risks have for the time being faded into the background. Safe haven assets have disappointed investors and traders and have not met the expectations of growth. In that kind of environment, there is no significant motivation for gold prices to rise on the basis of investment demand.
Meanwhile platinum and palladium held near 17 month highs due to rising industrial demand that raised confidence in growth outlook and also concerns over the supply outlook from South Africa and Russia. We believe part of the latest rally in platinum (and palladium) was spurred by the Swiss customs data which indicated that in December, Switzerland remained a net exporter of platinum (456,973 oz) for the fourth consecutive month and also a net exporter of palladium (432,650 oz)
Technically, a breakout on gold prices may come sooner rather than later. A break higher to $1685 gives a bullish signal to retest previous high of $ 1697. Should that fail, the bears will be in total control to push it back down to $ 1625. The MACD is rolling flat but stochastic showing more bullish attitude. It is a matter of time before prices breakout from this potentially bullish ensign.
Gold support is at $1,663 and $1,656. Resistance is $1,682 and $1,693. Silver support is at $31.50 and $31.32, resistance is at $31.99 and $32.30.
Platinum support is at $1,712 and $1,686. Resistance is at $1,738 and $1,760. Palladium support is at $756 and resistance at $777.
