Gold
The gold market has seen a continued expansion over recent days with prices now trading well above the prior all time highs. The consistent downside seen in the US Dollar has created a strong demand for gold which has also been helped by the increasing fears of a second wave of the COVID-19 virus. At the July FOMC meeting held last week, the US Federal Reserve offered a fairly dovish assessment of current conditions, noting that while the economy is recovering, activity levels remain well below those seen before the virus while warning that uncertainty over the path of the pandemic has obscured the outlook. With this in mind, US rate path expectations have been trending lower, creating upward pressure in gold prices.
This week traders will be watching the NFP release on Friday for the latest insight into the performance of the US economy. While April and May both saw record breaking growth in jobs, helping recoup the job losses seen over March, there are fears that the labour market will have lost momentum over June as a result of reversal in lockdown easing seen across many US states in response to the recent upward trend in infection numbers.
Silver
The silver market has also seen a period of strong demand over recent trading with prices breaking out to their highest levels since 2011. Along with the steady sales seen in USD, silver prices have also been helped by resilient price action in equities markets. Despite concerns over the potential for a second wave of COVID-19 it appears that for now, investors are not pricing in a return to nationwide lockdowns and the current central bank easing in place, along with expectations of further monetary support, are keeping asset prices well supported here.
Technical Views
GOLD (Bullish above 1824.56)
From a technical perspective. The rally in gold prices has seen the market breaking out to fresh all time highs, having moved well above the prior highs of 1824.56 While above this level, the outlook remains bullish with any pullback likely to find support on a retest of the prior highs.
SILVER (Bullish 19.6076)
From a technical viewpoint. The rally in silver prices saw the market briefly breaking above the 25.0756 level before reversing back below. With price trading well above the 50dma and previous 2020 highs, the outlook remains bullish here with focus on an eventual break above the 25.0756 level.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!