Gold

Gold prices continued to recover last week with the market extending gains back towards the 1750 region as the equities market reversed lower on fresh COVID fears. The risk adverse tone to trading last week created a base of support for gold prices, despite the rally in the US Dollar. The FOMC meeting last week saw the Fed striking a highly optimistic tone as it upgraded its economic forecasts for the year ahead as a result of the progress being made with the government’s vaccination effort. The upgraded forecasts and the hawkish skew in the dot plot forecasts have seen the Dollar rising higher in the wake of the meeting. The Fed also noted the upside risks in the economic outlook as a result of the government’s new $1.9 trillion stimulus package. The resurgence in the Dollar has stifled the upside move in gold though concerns around a third wave of COVID in Europe has seen investors scaling out of equities positions. With France, Germany and other European countries re-entering lockdown and with the UK on alert, risk appetite has been weakened.

Silver

Silver prices remained tightly congested last week with price holding within a narrow block of consolidation. The upside move in the Dollar has curtailed the upside impact from the rally in gold. This week, traders will be looking to the next round of PMI data sets with a focus on manufacturing data this week. If the factory sector is seen to have remained firm over the last month, the silver market is likely to stay supported in the near term. Any weakness in the readings, however, should see silver prices coming off. A range of Fed speakers will also be in focus as traders look for further details on the back of last week’s FOMC meeting. Silver is starting the week under heavy selling pressure as the USD up move continues.

Technical Views

GOLD

The recovery in gold prices ahead of the 1649.42 level has seen price trading back up towards the 1764.98 level. However, with selling pressure seen ahead of the level, the bias remains bearish for now with bears looking for a move below the 1649.42 level next.

SILVER

The retest of the broken bullish trend line in silver has seen sellers stepping in to drive price back down with the market turning towards the 25.0756 level once again. A break lower here will put the focus on a move towards the 22.5950 level next.

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