Gold

The gold market has seen fresh demand across recent sessions as investor attention shifts away from the post-lockdown recovery and onto emerging risk factors. Last week, relations between the US and China deteriorated further in the face of China’s newly approved National Security Law for Hong Kong. The law, which mark the first time that China has overridden Hong Kong’s constitution to install a Chinese law into the penal code, was met with great opposition by the US. Trump warned China not to press ahead with the law and, following its approval last week, announced fresh measures against the country on Friday. The new measures include the barring of “certain foreign nationals from china” as well as the elimination of preferential customs treatment for Hong Kong (which the US now no longer recognises as an autonomous region. Markets now wait to see if there is any reaction from China.

Away from hostilities with China, hostilities on the ground in the US have been growing increasingly concerning. Nationwide protests in the wake of the killing of an unarmed black man by a police officer last week have spiralled into six nights of rioting leading to some cities being placed under curfew and, in Los Angeles, the national guard being deployed for the first time since 1992. The situation has become increasingly tense and shows no signs of abating despite thousands of arrests being made and appeals for calm across the political and social spectrum.

Silver

The silver market has also been well supported across recent trading. The improvement in the equities landscape over the last two weeks and seen silver rally by around four dollars with price back up to its highest levels since February. Despite the US action against China, traders were seemingly preparing for more aggressive measures as equities have continued to rally which, along with weakness in the US Dollar has helped keep silver well bid here.

Technical Views

Gold (Bullish above $1703.10)

Gold prices have rebounded firmly off the $1703.10 level tested last week and are now back above the monthly pivot and retesting the $1747.15 level. While lower support remains in place, and with VWAP still positive, a further break higher is seen with the $1790.76 level the next upside target.

Silver (Bullish above $17.2897)

Silver prices are now on course to complete the symmetry projection move into $18.7870 following a further breakout above the yearly pivot at $17.2897 which stalled the rally last week. While this level remains supportive, the enar term bias continued to be bullish.

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