Gold
The gold market has started the week on a quieter note following the heavy sell off seen last week amidst a pickup in US treasury yields. Gold prices have previously broken out to fresh all time-highs before the move encountered selling pressure at highs taking the market back below the prior all-time highs of 1979.25. With the US Dollar back under pressure at the start of this week however, there is scope for a further move higher in gold prices.
Concerns around the developing second wave of the COVID-19 virus will also be a key factor for gold prices. Safe haven demand has been a big driver of the recent upside move in gold. Despite the current perception that the risk of national lockdowns returning is low, the environment could quickly shift as we move through the end of summer and into the autumn months with health experts warning that the fall and winter could see a fresh surge in cases.
Tensions between the US and China also present a consistent risk to markets with hostilities sporadically flaring up. Trump seems to have honed-in on China once again and with this stance likely to intensify in the run up to the elections, presenting further safe-haven induced upside risk for markets.
Silver
Silver prices have seen equally choppy price action over recent weeks. Following a break-out to 29.8611 highs last week, price has since reversed lower. However, with the dollar back under pressure today and with equities prices remaining well bid, the backdrop remain supportive for silver, keeping directional bias skewed towards higher prices in the near term. PMI readings from the US, UK and eurozone will be closely watched this week with traders paying special attention to manufacturing readings.
Technical Views
GOLD (Bullish above 1979.25)
From a technical viewpoint. The sell-off in gold prices last week saw price breaking back below the prior all-time highs of 1979.25. While price remains below this level, there is risk of a further move lower down to the 1824.56 level. If price can move back above the 1979.25 level, however, bulls will then be targeting a move back up towards the current 2076.12 all-time highs.
SILVER (Bullish above 27.3955)
From a technical viewpoint. The move lower in silver found decent demand into the 25.0756 level support taking price back up to retest the 27.3955 level. While this level currently holds as resistance, focus is on an eventual break higher towards the 29.8611. To the downside, if 25.0756 is broken, the next main support area is down around the 19.6076 region.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.