Gold prices have started the week in a rather subdued fashion with the safe haven metal remaining within the shallow range of consolidation which has persisted over the course of the last week. The gold market has been well supported over recent weeks amidst an uptick in fears over a potential second wave of the virus given the reports of a new upward trend in infections in the US and other countries such as China, Australia and Germany. However, upside momentum has waned somewhat over the last week on optimism regarding ongoing vaccine development. Pfizer and BioNTech announced last week that the FDA has granted two of their vaccines fast track approval. If regulatory approval is secured, the two firms plan to have produced over a billion units of the drug over the next year.
Despite the better tone to risk appetite over the last week, which has stalled the rally in gold prices, the sell-off in the US Dollar has kept gold prices supported. While recent US data has continued to highlight the ongoing recovery there, fears around the spike in new cases is keeping the dollar weighted to the downside, along with expectation of further Fed easing.
The silver market has seen a quiet start to the week also with prices remaining just below last week’s highs at the European open on Monday. Recent conditions have been favourable for silver given the ongoing rally in equities markets, particularly industrials, along with good buying on gold and continued weakness in the US dollar. Much of the support for silver has come from better industrial data around the globe as lockdown measures ease, helping lift demand for the metal. However, there are downside risks and should lockdowns need to be reintroduced as a result of fresh outbreaks of the virus, this would be damaging for equity markets, resulting in a drag on silver prices also.
GOLD (Bullish above 1747.15)
From a technical viewpoint. Gold continues to oscillate around the 1803.51 level, supported by the rising trend line from year to date lows. While above the 50dma the near-term bias remains bullish. However, momentum studies have started to trail off here and if price moves below the trend line, the 1747.15 level is the first support area to watch.
SILVER (Bullish above 18.9294 )
From a technical viewpoint. Silver continues to trade within the bullish channel which has formed over the course of the recovery this year and has now broken back above the 18.9294 level. While this level holds the near-term outlook remains bullish, with the 50dma turning higher here also keeping the 2019 highs of 19.6076 in view as the next target for bulls.
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