Gold

Gold prices have started the seek on a softer footing with equities catching a bid across the early European session on Monday. The main element driving the current markets action continue to be the focus on COVID vaccine expectations. With the UK having already begun vaccinations and with the US and Canada due to start this week, there is still a great deal of optimism in the market, which is detracting safe haven flows from gold.

The sell-off in gold is occurring despite weakness in the US Dollar. The focus this week will be on the December FOMC meeting on Wednesday. The bank is not widely expected to announce any further easing at this stage and there are risks of a Dollar bounce if the Fed strikes a more moderate tone. Traders will be paying special attention to the Fed’s outlook on the government’s vaccination programme and how long it feels the vaccinations will take to help stabilise the recovery.

Silver

Silver prices have seen a fairly mundane start to the week also with prices holding just below last week’s highs. Despite the downward moves in gold, silver prices have retained some demand, linked to the Dollar weakness and also the continued rally in equities markets. Along with a raft of central bank meetings this week, silver traders will also be keeping an eye on the latest set of manufacturing PMIs due in the first half of the week.

Technical Views

GOLD

Following the retest of the broken bearish channel, gold prices found support and traded back up to the 1858.28 level, which is acting as resistance for now. While price holds below here, there are risk of a further drop lower. Above here, however, and attention will turn to the 1926.63 level next.

SILVER

Silver prices continue to trade within the broader bearish channel which has framed the correction from the 29.8611 highs. However, the bearish move has lost a lot of momentum over recent months with price settling into a sideways range between the 22.5950 level support and the 25.0756 level resistance. To the topside, a break of the bear channel top and the 25.0756 level resistance will open the way for a move up towards the 27.3955 level. To the downside, a break of the 22.5950 level support will turn attention to the 19.6076 level support next where the bear channel low offers further support also.

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