We mentioned last week that the short term technical pictures for equities were pointing to further losses and at the same time a bullish bias was in place for the precious metals. Over the past couple of sessions, fears over an escalation of Western military intervention in the Middle East have dominated sentiment. As it stands, although volumes remain exceptionally low, we are testing the 1625-1632 region of support for the S&P, I would personally like to see a break of this level on significantly higher volume to become overly concerned, but caution is warranted.

In precious metals, we highlighted the break above $1350 for Gold, and the increased probability of further strength. The next significant region of resistance stands around the $1460 level, and unless we break through that region I would remain more skeptical of this rally. A failure to break through resistance would certainly bring a test of the now $1350 support into play.

For those, who sold equities versus buying precious metals just over a week ago, I would advise looking to start to take profits and if Gold were to trade at $1460 in the next couple of sessions take the whole position off and look for a better re-entry levels.

Philip Ball | Sales and Trading