Gold
Metals traders have seen plenty of two-way action over recent sessions. The corona-virus continues to be the main theme driving price moves as traders react to the latest headlines and data. Now entering its fourth week since it was reported, the virus continues to spread globally though the main impact is being seen in China where the death toll stood at 811 on Sunday. Despite hopes of a vaccine on the back of a Sky News report last week, no cure has been announced yet and fresh cases are still be announced, globally, on a daily basis.
While the virus continues to spread, gold prices are likely to remain well bid as investors move capital out of riskier assets. With the number of deaths now greater than during the SARS outbreak of 2002-2003, investor uncertainty remains elevated. Until a vaccine is established and health authorities are able to contain the virus, safe-haven demand will likely continue to drive gold higher.
Silver
Silver prices have been lower recently, despite the recovery seen in gold over recent sessions. With the Chinese economy under heavy pressure as a result of the shutdown there, the demand outlook for silver has dramatically weakened. Silver ha also come under pressure from steady US Dollar buying over recent weeks. Better US data (ISM Manufacturing, Non-Manufacturing, ADP Employment, NFP) has helped lift sentiment in the greenback. On Friday, the January NFPs came in at an impressive 225k jobs vs 163k jobs expected. Silver prices are likely to see plenty of volatility in the near term as the corona-virus situation and USD trading continue to impact price action.
Technical View
XAUUSD (Bearish below 1572.89)
XAUUSD From a technical viewpoint. Gold prices have fallen back below the monthly pivot at 1572.89. If price continues to move lower here, bulls will be looking for the monthly S1 1533.76 to offer support, in line with positive longer-term VWAP. Below here, a break back down to the yearly pivot 1446.72 and retest of the broken bearish trend line will be the next downside area to monitor.
XAGUSD (Bullish above 17.2359)
XAGUSD From a technical viewpoint. Silver prices continue to consolidate around the VWAP level , held up by the yearly pivot at 17.2359. With longer-term VWAP positive again, further upside remains the preferred scenario, targeting the monthly R1 at 18.8451 next.
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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.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% 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.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!