The safe-haven metal has seen net buying across the European open on Monday, though flows remain limited for now. Price action over the last week has been fairly muted with gold prices continuing to tread water in the middle of the 1763. 88 – 1826.71 range which has framed the market over the last four weeks. The recent correction off the lows of the range ran into trouble amidst the USD rebound which occurred in response to better than expected June retail sales data. However, the USD move proved to be short lived with the rally running out of steam last week.
Looking ahead this week, however, there is plenty of volatility risk. The headline focus of the week will of course be the July FOMC meeting. While the Fed has been keen to push back against rising inflation expectations and any talk of tapering, the ongoing uptick in data is increasing pressure on the central bank and traders will be keen to see if the bank’s view has shifted at all. If there appears to be any hawkish developments within the Fed, specifically any greater discussion around tapering, this will likely fuel a sharp uptick in USD, weighing on gold in the near term.
Silver prices have been heavily subdued over recent months with the USD shift weighing heavily on the metal. Silver prices have fallen firmly from the highs posted in the middle of the summer and have been weighed up on by fresh COVID concerns which have muddied the demand outlook over the remainder of the year as the prospect of fresh lockdowns once again raises its head.
The recent rally in gold was capped by the 1826.71 level with price pulling back into the middle of the range. However, with MACD and RSI still bullish the focus remains on further upside in the near term. Bulls will need to see a break above the 1826.71 level to encourage fresh momentum, putting the focus back on the 1919.92 level. To the downside, a break below the 1763.88 level will open the way for a move down to the 1700 level next.
The sell off in silver prices from the June highs has seen price trading down to test the 25.1018 level support, which is holding as a base for now. With MACD and RSI bearish, however, the focus remains on further downside with the 24.0073 level the next big downside marker to watch. To the topside, bulls will need to see a break above the 26.5711 level to alleviate this view.