Gold prices are reversing from initial highs posted over the Asian session as markets digest reports of President Trump finally signing off on the COVID relief bill. Over the weekend, there were reports that Trump had vetoed the bill which would refused stimulus checks for American workers, left many businesses without support and forced the government into a shutdown. However, with the president seemingly doing a last minute U-turn and signing the bill, these conditions have been avoided.
Equities markets are rallying in response to the news, drawing safe haven flows away from gold. However, downside is being offset somewhat by the continued weakness in the US Dollar which is selling of in response to the news. With a very light data calendar over the week as many countries remain off line due to Christmas and New Year’s bank holidays, flows are expected to be very light.
Silver prices are performing a little better than gold as we start the final few trading days of 2020. The lift In equities prices is lending some support to silver prices here. Along with the news of the US COVID relief package, equities have also been lifted by news that the UK and EU have agreed a last minute trade deal. The new is encouraging for silver given the positive impact on the industrial demand outlook and should help silver prices recover further in the near term.
Gold prices continue to stall ahead of testing the bearish trend line from 2020 highs Price action is signalling the risk of a reversal lower from here which will be confirmed on a break of the 1858.28 level. Below there, the 1803.51 level is the next key support to monitor. To the topside, the bearish trend line, along with 2926.63 level resistance is the next key level to watch.
Silver prices reversed from the test of 27.3955 following the breakout above the bearish channel. However, the 25.0756 has subsequently held as support and while price holds above here, the near term bias remains positive with bulls looking for a break above the 27.3955 level targeting 29.8611 next. To the downside, should price slip below the 25.0756 level, the 22.5950 level is the next big support to note.
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