Precious Metals Monday 27-04-2020

Trading Tips

Gold

Gold prices remain supported just below the 2020 high as we kick off the new week. The key market item this week will be the FOMC meeting on Wednesday. The Fed is not expected to add to its sprawling list of programs at this stage, however, its language and outlook is likely to take on a more dovish, concerned tone in light of the economic data we have seen since the last meeting, highlighting the severe damage to the US economy caused by the COVID-19 disruption.

The US GDP figure on Wednesday is expected to show a 3.9% contraction over the quarter which should keep US inflation and interest rate expectations nailed to the floor for the time-being, giving gold more room to run to the upside in the near-term. Given the GDP data and FOMC both scheduled for Wednesday this could prove to be a very decisive day for gold in terms of providing a catalyst for near term price action and, with dovish risks abounding for the Dollar, there are plenty of upside risks for gold this week.

Silver

The silver market has been more subdued over recent trading. While tracking the moves in gold for the most part, Silver has been affected by the recent price action in industrial equities. Last week we saw manufacturing readings for the US, UK and Europe each plumbing record lows, raising further concerns over the demand outlook for silver. However, as countries in Europe begin easing lock-downs, the US planning to re-open shortly and the UK expected to being easing its lock-down in May, traders are starting to eye the potential demand recovery which could help silver rise from here. In the near term though, there are still downside risks for silver given the safe-haven inflow for the Dollar which is still acting as a limiting factor for upside in metals.

Technical Views

GOLD (Bullish above 1747.15)

From a technical viewpoint. Gold prices continued higher here, though within the rising wedge pattern which highlights potential downside reversal risks. With VWAP still positive and with price holding above the 1703.50 support, a breakout to new highs looks imminent. However, caution is advised given the divergence in momentum indicators as we proceed higher to test the 1747.15 level.

Precious Metals Monday 27-04-2020

SILVER (Bullish above 15.7376)

From a technical viewpoint. Silver prices remain offered at the 15.7376 level for now, with VWAP (which is still negative) having moved down to just below that level. While the yearly S1 at 14.8867 supports, a break higher could still be seen with a move above the 15.7376 level needed to turn the near-term bias bullish.

Precious Metals Monday 27-04-2020

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.

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