The precious metals corrections which have started last week are exposed to be extended with the Libyan rebels controlling the position on the land driving the oil prices down with their promises to keep supplying the oil and the natural gas to the west. The gold and the silver have started profit taken waves last Thursday as the gold has broken 1444$ to 1447$ and the silver has taken out 36.74 to 38.16 as these precious metals have been underpinned by the beginning of military operations in Libya last week to cap Qaddafi's forces imposing a free zone of flying in Libya and that has been replied by opening by opening weapons stores to the people in Tripoli announcing the Mediterranean sea as a region of military operations opening the gate for any immigrations to Europe without any intersection which can extend the period of instability in Libya and tackle the land military operations against him but it looks that France and from the first moments of this action insisting in hitting him and his military facilities strongly as a reply of his words about funding the election campaign of Sarkozy and France asking for aids from Libya and this direction of France has caused for the first time different directions about the leadership of the allied forces which is always in US hand.

The gold has started to rebound from 1380$ after the intervention to weaken the Japanese yen which has been passed by an agreement from the G7 for restoring the lost confidence in the markets which has been hit by the Japanese earthquake and its implications which caused increasing of the nuclear radiations scales in Japan triggering selling asking for liquidities and specially for the Japanese yen which is well-used as a funding currency as its very low interest rate for lowering the investments costs and this action could brought back the hope for using it again as a funding currency as the direction is now for devaluating it after reaching these recent worrying rates which do not tackle the Japanese exports only but also the investments spending sentiment in the assets and stocks markets broadly. So it was a must to do for encouraging the markets confidence again while the criticism from the European countries are expected to be at the minimal level while the Japanese exports are depressed from different sides with the yen recording its all times high versus the greenback and the Japanese products are exposed to the radiations tests all over the world.

The Gold has been underpinned by this Japanese intervention too to recover its loses which reached to 1380$ under increased technical pressure coming from breaking the trend line support extended from 1307$ to 1412$ at 1428$, So it should meet now support at 1393 whereas the 38.8% Fibonacci retracement of the rising from 1307$ to 1447$ and then 1380$ and the falling of it can be followed by reaching 1350$ then 1324$ and the breaking of it can open the way for total retracement of this move at 1307$ which can be a dovish new sign in the case of breaking it while the way up should be met again with resistance at 1447$ as and breaking it can increase the buying momentum of it to test the next psychological waited level at 1500$.

While the silver is stronger technically as it is still above the trend line support extended from 26.39 to 33.66 and on a shorter time frame it has just come down below the trend line support which is extended from 33.67 to 35.73 but making a lower high out of this trend line can expose it to deeper profit taken wave which can be extended again to 33.66 then 31.69 and this can be a strong reversing sign accompanied with the breaking of the trend line support extended from 26.39 to 33.66 too

 

Kind Regards

FX Market Strategist

Walid Salah El Din

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