Technicals w/e 19 Dec 08

Finally a break out!

It's been hard work but both gold and silver made their much anticipated break outs to the upside this week. Despite some weakness later in the week, the Friday closes for both metals is extremely constructive for a continued move higher.

Silver

Silver was particularly strong this week bursting through the $10.60 level (on its 5th attempt) then rallying to our next resistance level of $11.39. A pull back later in the week tested and held $10.60 (a very bullish sign) before closing at $10.84. The MACD & RSI indicators remain bullish. With $10.60 behind us and one attempt at $11.39 already I am extremely confident of a my $13.66 target before years end. Give it took 5 attempts to break $10.60 level it should become strong support on the downside. I remain bullish on silver unless we see a weekly close below $8.93.

Silver USD weekly (click on chart for larger view)

Gold

Gold also broke its long standing overhead resistance of $830 racing as high as $888 early in the week. Like silver, a retest and hold of the old resistance level is bullish, however I would have liked to have seen a close a bit higher than the $836 settling price. The old 1980 high of $850 may be a bit of a hurdle for gold but seeing how easily it broke this number on Tuesday that price level may now be insignificant. I am still confident of a break to $900 next week and around $1000 by years end.

Gold USD weekly (click on chart for larger view)



Gold in Australian Dollars

The Australian dollar moved in tandem with gold this week meaning little change from last weeks close. Importantly it held the $1226 level to close at $1230. Whilst the technical set up is not as bullish for gold in AUD the current distribution pattern is a healthy sign that normally results in a continuation of the preceding trend. That means up. After checking the AUD/USD FX charts today I cant see a break much beyond 0.72 (based on long term technical resistance) so if this were to hold and gold hit USD $1000 by year end our long standing $1400 Gold in AUD target remains achievable. Even if it does not reach our target by Dec 31st it wont be long into 2009 before we see $1400 and higher.

Gold AUD weekly (click on chart for larger view)