Mixed Start For Metals
It’s been a mixed start to the week for the metals market with plenty of two-way action seen already since the Asian open last night. Gold prices weakened initially but have since found better demand once again into the European open, these moves have been broadly tracked by silver also.
The key driver for metals continues to be the very unsettling news flow around Russia/Ukraine tensions. Reports over the weekend painted a very bleak picture as shelling in Rebel held parts of Eastern Ukraine prompted fears that Russia might invade at any moment. However, since then, and despite grave warnings from US and UK leaders, the situations looks to have eased very slightly with reports that Putin and Macron have agreed “in principal” to holding an emergency summit aimed at avoiding war.
Given the very changeable nature of headlines around the issue, markets appear somewhat stifled currently with the US Dollar continuing to hold its recent range. Risk assets appear a little firmer this morning which suggests some downside for gold if it develops further as a theme. Gold has seen steady safe haven flows throughout this situation suggesting that if any sort of agreement is made which avoids war, prices are likely to recoil sharply. On the other hand, if tensions flare up and is Russia does invade, gold prices are likely to be sharply higher on safe haven demand, taking silver higher with it. The issue for silver, however, is that a sudden plunge in equities prices, in response to news of war for example, would offset the bullishness from a rally in gold.
Technical Views
Gold
The recent rally in gold has seen the market breaking out above the 1871.04 level with prices pausing just ahead of a test of the 1919.92 level and bull channel top. Momentum studies remain supportive here suggesting that, while 1871.04 holds as support, the focus is on a continuation higher and a breakout above 1919.92, targeting 1980.66 next. To the downside, 1826.71 is the next support to note.
Silver
Silver prices continue to hold around the 24.0073 level. Following the recovery off the latest test of the 22.3205 lows, silver prices are attempting to breakout above the contracting triangle but have yet to find the right momentum. With both MACD and RSI bullish, the focus is on further upside for now with a break of current highs targeting a move up to the 25.5384 level next.
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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.