Gold

The gold market has commenced the week with a strongly bid tone as the safe haven metal extends its impressive rally on the back of further Dollar weakness. Concerns over the outlook for the US economy as a result of the new upward trend in infections rates there has seen the global reserve currency heavily sold over the last week. Uncertainty around the US elections landscape is also creating a drag on the Dollar as the chances of Trump securing re-election look to be slimming. The economic impact of Trump losing the election has yet to be fully determined though uncertainty in the run up to the election is likely to keep the Dollar weighed down, keeping gold prices supported.

Tensions between the US and China are also creating safe haven demand for gold this week. Following the US closure of the Chinese consulate in Houston, China responded by closing the US embassy in Chengdu. Markets are now waiting to see if the situation escalates further given Trump’s warning that further consulates could be closed down. Simmering tensions between the US and China have once again been brought to the forefront during the COVID-19 crisis and the market’s main concern is that trade negotiations between the two nations could be impacted.

Silver

Silver price have been equally buoyant recently with price continuing to trade fresh highs amidst a supportive backdrop of a weaker US dollar, higher equities prices and higher gold prices. The rally in industrial stocks has been particularly supportive for silver. Recent manufacturing data out of the UK and eurozone has also been beneficial for silver, reflecting an improved demand outlook as a result of increase industrial activity. Traders will now be watching Chinese manufacturing data this week which has the potential to drive silver prices higher still.

 

Technical Views

GOLD (Bullish above 1824.56)

From a technical viewpoint. The outlook for gold looks firmly bullish here with price having broken out to fresh all-time highs today, breaking above the prior highs of 1824.56. While price remains above this level, the near-term outlook is for continued upside. Should we see any reversal back below the 1920.85 level, the next key support region to watch is at the 1824.56 level.

SILVER (Bullish above 18.9294)

Silver prices have now broken firmly above the recent bullish channel and are on course to test the 25.01 resistance level next. With momentum studies supportive here, and price well above the 50dma, the outlook is firmly bullish. To the downside, should any correction materialise, the next level to note is the 18.9294 region.

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