Gold

Gold prices have started the week under a little selling pressure here with equities remaining near recent highs despite the heavier tone to weekend newsflow. Fears over protracted lockdowns in the UK and Europe, as well as the spiraling state of the pandemic in the US, are peaking investor uncertainty once again. Health authorities are warning that the current rate of vaccination programmes is not in step with the speed at which the pandemic is developing and with several mutated variants now identified around the globe, the risk of a third wave of the virus remains elevated. There have also been concerns over the health of vaccine supply chains given the issues being faced in the UK and parts of Europe where supply has fallen well below target levels.

An uptick in the US Dollar is also curtailing upside in gold at the start of the week. Despite expectations of broad US stimulus, the Dollar looks to be maintaining residual safe haven inflow here. If lawmakers are able to quickly push through the $1.9 trillion stimulus package on offer, this should help keep equities markets supported and send the Dollar lower again. However, if the package is delayed, or ends up being watered down, this will likely see risk assets coming off with the Dollar trading higher again, keeping gold pressured lower.

Silver

Silver prices are trading broadly in line with gold over the European session on Monday. The uptick in the US Dollar is offsetting the upside drive from higher equities prices over recent weeks. For now, silver remains range bound at the bottom of the recent declines and is unlikely to see any meaningful directional moves until there is better clarity on forthcoming US stimulus.

Technical Views

GOLD

Gold prices remains trapped with in the apex of the large contracting triangle pattern. Price is currently straddling support at the 1858.28 level and while above here, the near term bias is bullish. Below here however, the next support to watch is at the 1803.51 level.

SILVER

Silver prices continue to find support at the 25.0756 level keeping the near term view bullish for now. Price remains above the broken bear channel, suggesting a continuation higher is still the preferred option. However, a break below 25.0756 could open the way for a move deeper towards the 22.5950 level next.

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