Gold

Gold prices have started the week in a muted fashion with the market sitting a little way off last week’s highs for now. With the US Dollar still in decline, the near-term outlook remains favourable for gold though continued upside in equities markets is diluting upside momentum somewhat.

This week, the big focus for traders will be the Fed’s FOMC meeting on Wednesday. Recent US economic data has continued to surprise to the upside meaning that the Fed is likely to take a more optimistic tone, which could create headwinds for gold into the middle of the week if USD rises.

However, even if the Fed is optimistic on the recovery, the bank is likely to stick to its message that any upshot in inflation will be temporary in nature and as such, there will be no need for the Fed to adjust its policy this year. If the Fed is seen elaborating further on the upside risks it mentioned last time around, however, this could be bearish for gold so as such, this meeting will likely be pivotal for the near-term direction of gold and the Dollar.

Silver

Silver prices have largely tracked the recent moves in gold with price holding just off the highs printed last week around the mid 26s. Last week, a positive round of PMI readings in the UK, EU and US helped lift silver prices, encouraging a more optimistic demand outlook as the recovery in those economies continues to gather pace.

The continued upside in equities markets has also been supportive for silver prices and looks likely to keep the market supported in the near term, dependant of course on the Dollar moves in response to the FOMC this week.

Technical Views

Gold

The breakout in gold above the bearish channel from 2020 highs and above the 1763.88 level has stalled for now. Price met selling interest as it rose to test the 1800 handle though, for now, price is still holding above the aforementioned region. While price remains above the broken channel, there is room for the recovery to develop further towards the 1763.88 level next.

Silver

The breakout above the falling wedge pattern which framed the correction from 2021 highs has paused for now. Price is sitting above the 25.1018 level and while the region holds as support, the focus is on a continued push higher towards the 25.4502 level next. To the downside, should price slip back below the 25.1018 level, the next region to watch is the 22.3205 level support

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.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money