Sunday, November 29

Precious Metals Monday 14-09-2020

Gold

Gold prices continue to hold within the recent range which has formed following the correction from the 2076.12 highs. The recent pause in the US Dollar sell off has seen gold losing upside momentum over recent weeks though, with the Fed having recently outlined its adjusted inflation targeting strategy, there is still plenty of scope for further upside in gold. The Fed confirmed that it will no longer be targeting 2% inflation as a hard level and will instead look to achieve an average of 2% inflation, allowing inflation to run above that as necessary. This means that the market will no longer be expecting the Fed to raise rates as inflation approaches 2% and consequently means that the minimum threshold for raising rates has now be increased.

On the data front, gold prices have also seen a lack of demand as the market reacts to better-than-expected US data. However, it is worth noting that the latest set of US labour reports raise some questions over the health of the US economic recovery. The headline NFP number, while still positive, was slightly below expectations and has reduced significantly from the initial increase of over 7 million jobs in April to just over 1 million jobs in August. This raises concerns over the drop-off in momentum particularly as an increasing number of US states grapple with fresh outbreaks of the virus and the need to reintroduce lockdown measures.

Silver

Silver prices have experienced broadly similar conditions as those seen in gold over recent weeks. Following a rally up to the 29.8611 area, price has since corrected lower and remains range bound for now. The sell-off in US equities over the last week has had a dampening impact on silver prices recently though the residual effect of USD weakness over recent moth has offset much of the negative impact.

Technical Views

GOLD (Bullish above 1803)

From a technical viewpoint. Gold prices have been fairly quiet over recent weeks. Price has been in tight range, underpinned by the 50dma which has provided support, and held up by resistance at the 1979.25 level. However, while price remains above the 1803 – 1824 region, the near-term bias remains bullish.

Precious Metals Monday 14-09-2020

SILVER (Bullish above 25.0756)

From a technical viewpoint. Silver prices continue to trade around the 27.3955 level, with price back below the level for now. However, with the 5odma supporting, while price holds above the 25.0756 level, the near-term bias remains bullish with focus on an eventual break of the 29.8611 highs.

Precious Metals Monday 14-09-2020

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Credit: Tickmill

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