Gold prices have come off a little over recent sessions. Following a break above the 1703.10 level last week, with price trading up to fresh 2020 highs, the market has since sold off and come back under the level. The sell-off comes despite continued rallies across equities markets which had been supporting gold previously. However, the with the US Dollar recovering here also, gold has seen some building selling pressure.
The outlook for gold remains skewed towards higher prices here. With the US economy reeling in the face of the ongoing COVID-19 crisis, US inflation and rate expectations have been obliterated. With the US Dollar likely to remain subdued as a result of the ongoing US easing, and the prospect of further easing, gold has room to climb further.
Developments within the COVID-19 landscape continue to drive markets here. With the US now planning to reopen parts of the economy as soon as early May, there is a risk of a second wave of infections which could cause further complications down the line, leading to a return to lock-down conditions. With this risk in mind, safe haven demand for gold should remain elevated as we move forward.
Silver prices have seen weaker trading over recent sessions also, as the market maps the moves in gold. With equities still supported here, and the pull-back in gold only shallow for now, silver prices retain their near-term bearish bias. However, strength in USD is limiting the recent strength in silver. This week, the market will receive the latest set of manufacturing data for the US, UK and Europe which will be closely watched by silver traders. Any further weakness in these readings is likely to provide a further headwind to silver.
From a technical viewpoint. Gold prices have broken back beneath the 1703.10 level this week. However, while price remains above the yearly R1 at 1625.48 the near-term view remains bullish. Gold continues to be supported by bullish VWAP which is now creeping up to just under the yearly R1 adding further support there should the level be retested.
SILVER (Bullish above 14.3907)
From a technical viewpoint. While silver remains above the monthly pivot at 14.3907, the near-term bias remains bullish here. However, with VWAP turning negative, there are risks of a deeper pull-back lower if price moves back below the yearly S1 at 14.8842.
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