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By Patrick MontesDeOca

The August gold futures contract had a weekly bullish reversal signal, negating the bearish trend that started early in the week when buyers failed to penetrate the previous weekly resistance levels of 1,597 made July 3, 2012. This came after a very disappointing meeting of the eurozone Central Leaders over the weekend with no clear or decisive plan to resolve a very delicate overleveraged eurozone economy, and creating a more pronounced worldwide deflationary sentiment by continuing to kick the can down the road.

The disappointing news pushed the yellow metal to a low of $1,554.40 made on July 12. At these levels we identified major physical buying or the next floor level of support in the cash bullion market.

The short players in the paper market have tried eight times to break the gold and silver market since the low of $1,529 was made on May 16, 2012. That, with less impact each time, and finding more buyers than the selling pressure pulled this market up to end the week for a gain of nearly $28 per ounce.

Let's take a look at the gold and silver charts below and see what we can look forward to next week.

The August (Comex) gold contract closed at 1,592, +26.7 (1.71%). The 52-week range is 1,529.30 to 1,921.50.

The market closing above the daily nine-, 18-, and 36-day moving averages on a weekly basis negates the previous weekly bearish reversal to bullish. With the market closing above the VC Weekly Price Momentum Indicator of 1,583, it has set the weekly trend from bearish to bullish.

Look to take some profits if long as we reach the 1,604 to 1,616 levels for early next week. If stops are taken out here, we could see a rally up to the 1,630 weekly resistance levels.

Buy corrections at the 1,572 to 1,552 levels to cover shorts and go long on a reversal stop. If long, use the 1,552 level as a SCO/GTC (stop close only and good 'till cancelled).

The December (Comex) silver contract closed at 27.49, +21 (+0.77). The 52-week range is 27.25 to 44.19.

The market closing above the daily nine- and 18-day moving averages on a weekly basis negates the previous weekly bearish signal neutral to bullish. With the market closing above the VC Weekly Price Momentum Indicator of 27.03, it has set the weekly trend from bearish to bullish.

Look to take some profits if long as we reach the 27.62 and 27.79 levels early next week. If stops are taken out here, we could see a rally up to the 28.34 weekly resistance levels.

Buy corrections at the 27.26 and 27.07 levels to cover shorts and go long on a reversal stop. If long, use the 27.07 level as a SCO/GTC.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AGQ, PSLV, AG, GDX, PHYS over the next 72 hours.

Disclaimer: Precious metals products trading involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.

Source: Gold, Silver Futures Special Weekly Report