The gold market has started the week in demand, with price trading higher initially. However, the rally is now starting to reverse, given the recovery in the US Dollar over early European trading today. Following a strong rally in risk assets over recent weeks, investor sentiment has retreated a little in the run up to Christmas in reaction to news of a new “super-strain” of COVID which has led to fresh UK & EZ lockdowns, as well as fears over ongoing Brexit negotiations.

In the UK, London and other parts of the country have been plunged back into the strictest lockdown measures over Christmas following COVID rates having doubled over the last week. Many countries in Europe have now banned flights from the UK, causing huge travel disruption around Christmas. Many other countries in Europe such as Germany and Italy have also imposed lockdowns over Christmas with fears that, despite COVID vaccines, lockdown measures will remain in place for months to come to combat the surge in the virus.


Silver prices have traded largely in the same fashion as gold so far today with price reversing from initial highs as the US Dollar strengthens. The rally in the Dollar comes despite news that Congress has agreed a fresh $900 billion stimulus package, including $600 billion in stimulus checks and $300 billion in unemployment support. The figure is far less than the $1.2 trillion amount agreed earlier in the year, and has done little to lift the heavy tone to trading so far today with metals likely to continue lower as the Dollar rally picks up pace.

Technical Views


The rally above the broken bear channel has seen price moving back above the 1858.28 level last. However, price is stalling on the approach to the bearish trend line from year to date highs, with the 1926.63 level sitting just above. The near term view remains bullish while price holds above the 1858.28 level.


The rally in silver prices today saw price trading up to the 27.3955 level where sellers stepped in taking price lower. For now, price is holding a retest of the 25.0756 level support, and remains above the broken channel, keeping the near term bias bullish. Below 25.0756 however, the next support to watch is down at the 22.5950 level.

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