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Market News Gold And Silver Rally On Safe-Haven (With Trading Strategy)

Gold And Silver Rally On Safe-Haven (With Trading Strategy)

Worst fall in US GDP since Second World War; After Gamestop, silver in spotlight following Reddit day-trader frenzy.

Eden
2021-01-29
1352

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Gold rose slightly on Friday; the spot gold rose 0.16% to $1845.36 per ounce by 15:50(GMT+8).


"Gold is largely going to continue to tread water as it is waiting for a proper catalyst," said Michael McCarthy, chief market strategist at CMC Markets.


The greenback has risen 0.8% this month, helped by higher U.S. Treasury yields and concerns that President Joe Biden's fiscal spending package will not be as large as the proposed $1.9 trillion.


Higher Treasury yields elevate the demand for the dollar as it is used to buy bonds.


"The short-term fundamentals have currently turned unfavorable towards gold as dollar strengthened because of unwinding stocks bets in the U.S," Phillip Futures said.


Investors remain focused on the U.S. stimulus deal as analysts warn that a smaller stimulus or delay in getting the aid passed could weigh on gold prices.


A silver frenzy calmed on Friday, the silver fell 0.1% to $26.431 per ounce by 15:50(GMT+8).


Silver gained 4.5% on Thursday after some traders moved to cover short positions on rumors about a GameStop-style squeeze driven by retail investors.


The entire market -- from miners' shares to exchange-traded funds and even the physical metal -- has emerged as one of the latest targets of the r/wallstreetbets board now famous for fueling a short squeeze in Gamestop Corp. that sent its market value soaring. Posts encouraged people to pile into IShares Silver Trust, the largest silver exchange-traded fund, and one described it as "THE BIGGEST SHORT SQUEEZE IN THE WORLD."


"It is true that the combined efforts of those on the Reddit forums can dramatically influence the price of individual stocks, but if you compare the size of the entire silver market to the market cap of the individual companies that forums have recently targeted, we don't see this as having potential to significantly move silver into a short squeeze scenario," said John Feeney, business development manager at Guardian Vaults, a Sydney-based dealer.


"Silver's market cap is too large and those on the forums typically want to see quick gains, so I wouldn't read into it too much," he said.


"Gold has tentatively lost its mojo as U.S. stocks resume their climb higher and as 'little sister' silver gets an endorsement from the Reddit army of traders," said Edward Moya, senior market analyst at Oanda Corp. "Gold has weathered waning demand as institutional investors focus more efforts on the recent volatility that stems from the retail traders who are trading heavily shorted stocks and now silver. Gold needs to recapture and hold the $1,850 level otherwise bearish momentum could trigger a tentative plunge below $1,800."


Gross domestic product in the U.S. grew at a 4% annualized pace in the fourth quarter, below the 4.3% Dow Jones estimate.


Full-year GDP declined 3.5%, the worst year for the U.S. since at least the end of World War II, as a pandemic-induced recession took hold in February.


Gains in consumer spending and private investment led the growth, while across-the-board cutbacks in government spending held back the economy.


Although the data were weaker than expected, it doesn't come as a major surprise to many economists as the U.S. economy continues to deal with the devastating effects of the COVID-19 pandemic.


"The more modest 4.0% annualised gain in fourth-quarter GDP was mainly due to some temporary weakness in consumption, which was dragged down by a combination of the withdrawal of fiscal support and the resurgence in coronavirus infections," said Paul Ashworth, chief U.S. economist at Capital Economics.


Trading Strategy (source: Trading Central)

Pivot: 1836.00


Our preference: long positions above 1836.00 with targets at 1856.00 & 1867.00 in extension.


Alternative scenario: below 1836.00 look for further downside with 1828.00 & 1818.00 as targets.


Comment: the RSI is mixed to bullish.


Supports and resistances:

1878.00

1867.00

1856.00

1846.00 Last

1836.00

1828.00

1818.00

Pivot: 25.8100


Our preference: long positions above 25.8100 with targets at 26.9700 & 27.3200 in extension.


Alternative scenario: below 25.8100 look for further downside with 25.5500 & 25.1700 as targets.


Comment: the RSI is bullish and calls for further advance.


Supports and resistances:

27.8000

27.3200

26.9700

26.4400 Last

25.8100

25.5500

25.1700

Guideline for Trading Central strategy 


Trend chart reading guideline


1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days


2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.


3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;


4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.


How to use TC strategy?


1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 


2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.


3. [Alternative scenario] is the plan B for your reference. 


4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 


5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.


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