Gold
As we inch ever closer towards the end of the year, it seems that the market continues to lose momentum. The stagnation of the last fortnight is continuing this week with prices still hovering above the 1763.88 support level. However, there is a high risk of volatility this week given the upcoming December FOMC meeting, due on Wednesday. On the back of yet another strong CPI reading, and in line with the hawkish commentary of several Fed members (including Powell), the market is broadly expecting the Fed to step up its tapering operation this week.
While the recent Omicron announcement created some initial uncertainty, it appears as though risks around the new variant have diminished and, with inflation continuing to surge higher, the Fed looks to have ample cause to lift tapering here. Should the Fed deliver on hawkish expectations, USD is likely to be well bid, weighing on gold prices. However, if (and this is the outside scenario), the Fed opts to hold off on bolstering tapering, as a result of Covid uncertainty, this would be a near-term negative for USD, allowing gold prices to trade higher.
Silver
Silver prices remain subdued at the start of the week also. Price has been on a fairly consistent sell off over the last month and, with the potential that the Dollar receives another boost this week, the risks appear skewed towards further downside. Silver is currently challenging the YTD lows, a break of which would be a firmly negative development for the market. As with gold, however, any disappointment for USD bulls at the FOMC will be a positive for silver prices near-term.
Technical Views
Gold
Gold prices are still hovering just above the retest of the broken bear channel and just above the 1763.88 level support. While above here, there is still room for a continuation higher, with MACD and RIS both turning higher. However, a break below the level will see the 1700 handle coming into view as the next target.
Silver
The recent sell off in silver has seen the market breaking down through the rising channel from October lows. Price is currently probing beneath the 22.3205 level with the YTD lows at 21.4425 the next big support level to watch. With MACD and RSI bearish, the focus remains on further downside for now. To the topside, any correction higher from here will see the 24.0073 level as the main hurdle.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.