Gold

Gold prices have started the week under heavy selling pressure as the safe haven continues to see an exodus of capital amidst the better risk conditions taking hold of markets. Expectations and optimism around recent COVID vaccine news are continuing to dominate price action. Such is the strength of the current risk-on sentiment that gold prices find themselves unable to benefit from the weakness in the US Dollar, which typically creates support for gold.

The US Dollar has been consistently sold following the news at the start of last week that Trump has approved the transition process for the Biden administration, alleviating a great deal of the uncertainty around that elections and putting the focus firmly on the incoming democrat president. Traders are now looking ahead to the prospects of a further US stimulus package which Biden is pushing for as a soon as possible, though looks most likely to occur following him being sworn in on January 20th.

Despite the weakness in the US Dollar, the near-term outlook remains skewed to the downside for gold given the likelihood of risk assets continuing higher as the focus remains on the vaccine developments. Incoming details will now set the tone for the pace of the risk rally and the consequent downside in gold. However, any delays or difficulties with the rolling out of the drug pose upside risks for gold

Silver

Silver prices have been equally sold over the start of the fresh week. While much of the downside in silver has been offset by the rally in equities and the weakness in US Dollar, the strength of the downside move sin gold is dragging silver prices lower here. However, the silver market has not seen the same strength of downside price action that gold has done and while equities hold near highs, should continue to see only a laboured grind lower.

Technical Views

GOLD

Gold prices continue to trade lower with price having broken through several key levels on the last leg down. Gold is now retesting the broken bearish channel, having slipped under the 1803.51 level. While below here, the focus is on a continued grind lower.

SILVER

Silver prices have now broken below the 22.5950 level support. This is a key level for silver and while below here the outlook remains tilted lower. The next support region to watch is down at the 19.6076 level with the bear channel low coming in around that area also creating further support.

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