Gold

Gold prices have seen renewed buying over recent session as safe haven flow have started to re-emerge. With US data weakness keeping US rate path expectations subdued throughout the end of 2020, and with equities markets stabilising, there is room for gold to continue to appreciate here.

Gold had seen heavy selling earlier in March due to the free-fall seen across asset markets which distorted its usual correlations and trading dynamics. A key component of the sell-off was the increased need among traders to revert positions to cash in order to fund margin calls during the equities sell-off. However, with equities having former a bottom (for now at least), gold prices have been able to recover with price trading back up to around 40 points of the 2020 highs.

Last week, the US non-farm payrolls number came in at -701k, over seven times worse than the consensus forecast of -100k. With the US employment market in free-fall as a result of COVID-19, further weakness is expected over the coming month which is likely to keep gold prices supported. The extent to which gold can rally will depend on the movement in USD which for now is also seeing safe0haven inflow, capping upside in gold.

Silver

The silver market was also able to stabilise last week, supported via its correlation with gold. For now, silver prices have carved out a low around the 11.77 mark. With equities stabilising, industrial indices have been able to recover, lending further support to silver. The latest US manufacturing data has also been a positive factor for silver as, despite the dip into contractionary territory, the reding as higher than expected. On the back of better manufacturing data in China, the industrial demand outlook for silver is not as bleak as initially thought. However, the impact of a further month of lockdowns on the manufacturing sector is likely to be a downward force.

Technical View

GOLD ( Bullish above 1556.74)

From a technical viewpoint. Gold prices have now recovered firmly off the yearly pivot/structural support at 1445.98. Price has now recovered above the 1556.75 level and is now retesting the yearly R1 at 1628 with the bull channel top capping the recovery for now. While price remains above the 1556.75 level a further move higher is likely with the 2020 highs at 1703.10 the next upside region to watch.

Precious Metals Monday 06-04-2020

 

SILVER (Bullish above 15.0000)

From a technical viewpoint. Silver has now posted three consecutive weeks above the 11.7730 level with last week closing back above the 13.9443 level. While above here, a further recovery higher looks likely though there is resistance close above with the broken S1 at 15.00. However, with VWAP having turned negative now there is still the risk of a continuation lower given the current inside bar pattern on the weekly timeframe.

 

Precious Metals Monday 06-04-2020

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