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Gold and Silver have been gaining since the beginning of the week, following the Brexit decision. Despite the recent recovery in global equities on hopes of further actions by global central banks, safe haven assets including Gold, Silver and the Yen are still gaining. Usually, when stocks go up, investors don't typically shift to safe haven assets.  This means that there is a high demand for these assets.

 

Silver YTD

 

Silver has advanced by nearly 40% this year, rising exactly by 38.84% since the beginning of the year until this report is released. Silver has broken a significant resistance area overnight at $18.50 and has continued gaining, reaching as high as $19.39, the highest level since August of 2014. The next resistance area stands at $19.70 followed by the psychological resistance at $20.

 

Silver Demand

 

 

The proof of high demand for Silver can be seen through the total known ETF holdings of Silver, which advanced all the way to the highest level since 2014 with 0.664B troy ounces this week. Moreover, the latest Commitment of traders report by the CFTC shows that Silver Non-Commercial Longs is at a record high, while shorts remain on the downside.

 

Technical Outlook

 

 

From a technical analysis point of view, silver has broken out of its downtrend line and its latest tight range, remained supported by its 200 Month MA since its bottom around $14. Technical indicators in short and medium term remain bullish, which maintains the possibility for another rally ahead. The medium term resistances stand at $20.50 which represents its 50 Month  MA, followed by 21.63 which represents its 100 Month MA. In the short term (weekly) the 200 WEEK MA stands at 20.19. Most of the technical levels stand between $20 and $21 area. Therefore, expect sellers to be there to stop the bulls.

 

 

Gold YTD

 

Gold has the same story, but silver continues outperforming gold. Gold today advanced all the way to 1334 so far (+26% YTD), while the major resistance remains at 1360, which is the long term down trend line, and which might be tested in the coming weeks.

 

Gold Demand

 

The total known ETF holdings of Gold has recovered from 2015 lows all the way to the highest level since 2013, which reaffirms the demand for Gold. Moreover, the latest COT report by the CFTC showed that Gold longs are at record highs while shorts are on the downside.

 

 

Technical Outlook

 

From a technical analysis point of view Gold is finally trading above its 100 WEEK MA for the first time since 2013. It is also trading above its entire key moving averages (50, 100 and 200 MA) for the first time since 2012. In the meantime, the next key resistance area stands around $1360, which represents its long term down trend line, which should be watched very carefully. This is where sellers are likely to appear again. However, with such momentum, bulls may be the one to win the battle

 

On the monthly chart, Gold is trading above its 50 Month MA for the first time since 2013, which is seen as another bullish signal in the medium & long term.

 

Conclusion 

 

Demand of Gold and Silver is on the upside because the global economic outlook remains uncertain, especially after following the UK referendum  event and speculation around other potential exits in Europe, and perhaps even with Scotland in the UK.  Moreover, central bank normalization is still far away. In fact, easing policies may represent the beginning of another stage. Therefore, shifting to safe haven assets and/or diversifying portfolios with the inclusion of safe haven assets may soon be the next trend.