The gold market has started the week on fairly flat note, with price hovering around Friday’s closing price as of writing. The market has visibly lost momentum and volatility over the last week as price continues to consolidate in the lower end of the range set by the November 9th sell-off.
Gold prices have been caught between conflicting market factors over the last week which have left traders struggle to affect a directional move. On the one hand, continued weakness in the US Dollar has provided some upside support for gold, keeping prices underpinned by the 1858.28 level support. However, the continued strength in equities markets is offsetting the upside impact of a weaker Dollar. risk appetite has been bolstered by the recent set of encouraging announcements regarding various COVID vaccines. With a handful of firms having now announced effective vaccines, governments in the US, UK and Europe are planning to begin introducing vaccines ahead of the end of the year with a view to returning countries to normal by spring/summer 2021.
Despite the better news-flow around COVID with the virus surging on a global scale there is still plenty of downside risk for gold. Should the vaccine rollouts become delayed for any reason or if there is news of any adverse reactions which might impact public take-up, this could fuel a reversal in risk appetite, support gold.
Silver prices reflect the current stunted price action we are seeing in gold with price continuing to trade the range between 22.5950 and 25.0756 levels. Despite the lack of momentum currently, silver prices have been impacted more favourably by the rally in equities markets. The upside momentum in industrial stocks is lending support to silver. Traders this week will be watching the slew of PMI data releases which could also support silver if further upside is seen in the indicators.
Gold prices continue to hold at the 1858.28 level support. This level has acted as firm support since July and while intact, the medium-term bias remains bullish. However, should price slip below the level, the next support to watch will be the 1803.51 level, with a retest of the broken bearish channel coming in around the same price also.
Silver prices are trading towards the upper end of the corrective bearish channel, supported by the 22.5950 level. Bulls will need to see a break back above the 25.0756 level and channel top to restore upside momentum, targeting 27.3955 next.
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