Week ending 15th February 2013

Gold & Silver break through technical support to reach 6 month low.

Gold closed at its lowest level on Friday after breaking below US$1,600 during the day.

This was a week for the technicals, with Gold breaking support levels at US$1,660 and then US$1,630 as sell stops were triggered. Silver followed a similar pattern dropping 4.25% for the week.

This technical selling coupled with the absence of Chinese buying due to the Lunar Year holiday led to the drop of 3.4% for Gold in the week.

During the week we saw the release of the Bank Participation report where the US banks have been reducing the short Gold positions. There was on the other hand an increase in Comex futures or outstanding positions at the end of trading which can be interpreted as new bearish positions being established.

Out of the Eurozone we saw some negative economic data in the form of GDP numbers for the last quarter showing that most European countries dropped into negative territory in the last quarter. The European Central Bank also stated that they are projecting no growth during 2013.... all of this should have been positive for Gold!

Look out this coming week for the US Fed's minutes from the end of January meeting to come out on Wednesday, as this has in the past had an impact on Gold. On Thursday the USA CPI will be announced.

Summary:

Last week the view was that there would be solid support at US1,660. This did not eventuate as sell stops were triggered. Most analysts are divided as to whether we will see further downside or if we have reached the bottom.

With the Chinese back in the market this week and India heading into another wedding season, we could see a bounce back.

Gold is still being affected with the renewed interest in equities with many investors waiting to see what to focus on next in their short term investment strategy.

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The following sample is Gold over the 7 days ending 15th February.