The gold market has seen a listless start to the week with prices remaining subdued though not far below the 2020 highs. Equities markets have started the week with strong conviction following last week’s record jobs number for May which saw just shy of 5 million new jobs being created over the month. However, despite the optimism over the recovery, there is still a great deal of downside risk which is keeping gold prices supported here.
In the US, 12 states have now reported fresh, record highs in the number of new infections, leading to the return of business restrictions in some places such as California where beaches, bars and restaurants have been closed again in as many as 19 counties.
Despite the rise in equities prices, gold remains well supported at current levels given the significantly reduced outlook for US rates. The Fed has already said that it expected rates to remain at current or lower levels until at least 2022. While some believe that date night be a little pessimistic given that rebound in the jobs market, the growing risks of further lockdowns across the country poses significant risks for the economy and raises the likelihood of further fed easing being needed in the meantime.
Silver prices have started the week with a more positive tone given the lift in equities prices. News of the strong recovery in jobs last month has helped boost the outlook for silver, with industrial stocks rallying firmly. The key now will be whether the US manufacturing sector has been able to move back into growth over this month, which should help further support the rally. However, second-wave fears could create headwinds if further lockdowns are introduced and traders will continue to monitor virus headlines and stats this week.
GOLD (Bullish above 1747.15)
From a technical viewpoint. Gold prices remain well above the monthly pivot (1747.15) and are sitting just below the 1790.76 highs for now. While above here and with VWAP and momentum studies supportive, the near-term outlook remains bullish. A break below the pivot, however, opens the way for a test of deeper support at the 1703.10.
SILVER (Bullish above 17.2131)
From a technical viewpoint. Silver continues to hold in the consolidation pattern which has formed above the yearly pivot at 17.2131 and monthly pivot at 17.8080. While above here, the next objective for bulls is the completion of the symmetry projection pattern into the 18.7870 level. Only a break below the 17.2131 level negates this view.
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