Gold prices remain under pressure this week as the sell-off in global asset prices continues. Safe-haven demand for the US Dollar is dragging gold prices lower as investors move money out of other assets and into the greenback. In the US, Congress is finalising plans for a $425 billion emergency relief package for the economy. These funds will be made available for the Fed to help in its efforts to prop up the economy. The Fed has now cut rates by 1.5% over March along with adding $750 billion to its QE program. These measures, which have been the most aggressive action from the Fed since the GFC, have yet to help stem the sell-off in equities markets which continue to slide lower this week.
With the rally in USD looking set to continue here, the outlook for gold remains clouded with further downside likely. This week, the market starts to receive more accurate data shots for the COVID-19 period. Special attention will be on a raft of PMI data sets for the UK and Eurozone. Weakness in these data sets will likely see asset prices pushed further lower, dragging gold down once again.
Silver prices have been equally well-sold over recent sessions with price breaking down through the 2016 lows. Along with the moves lower in the gold market, the rally in USD has also hurt silver. Manufacturing data from the UK and Europe this week will be closely watched by silver traders. Much silver demand is linked to the industrial sector and the drop-in activity as a result of COVID-19 is a major negative factor for silver. If data points this confirm the expected drop in manufacturing this should see silver prices continuing lower in the near term.
XAUUSD (Bearish below 1556.74)
From a technical viewpoint. Gold prices continue to sell-off this week. For now, price has found support at a retest of the yearly pivot at 1445.98. While above here, bulls will be looking for a recovery back above the 1556.74 level in line with VWAP which is still bullish. Should price break lower from here, the yearly S1 at 1339.79 will be the next level to watch.
XAGUSD (Bearish below 13.9443)
From a technical viewpoint. The heavy sell-off in silver has seen price breaking down through the yearly S1 at 15.0000 and the 2016 lows at 13.9443. For now, price has found support at the April 2009 lows (11.7730). While price holds here, bulls will need to see a recovery above the 2016 lows to alleviate downside pressure. However, with VWAP still negative here, the market is vulnerable to further downside.
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