Gold
Gold prices have started 2021 with a bang, rallying just under 2% over the European session so far on Monday. The rally comes despite a simultaneous move higher in equities markets and reflects the market’s aversion to the US Dollar currently. The greenback continues to be heavily sold, extending the down-trend which ran across the back end of last year. Markets are shunning the Dollar due to a mix of better risk returns elsewhere and continued political uncertainty. The Georgia Senate races will be decided tomorrow and if the democrats are able to win both seats this would give them control of the Senate, increasing the likelihood of a greater stimulus package which would further supported equities and gold, keeping USD subdued.
On the data front this week, the two main events to note are the December FOMC minutes and the December NFPs. Traders will be keen to see to what extent the Fed has discussed the prospect of further stimulus in wake of the ongoing pandemic. For the NFPS, the market is looking for a 69k print down from the prior month’s 250k result.
Silver
Tracking the moves in gold, silver prices have started the year on a firm footing also. Silver is rallying across the early European session so far on Monday, boosted by the weakness in the US Dollar and continued strength in equities. While lockdowns across many countries in Europe raise concerns, recent manufacturing strength (despite lockdowns in the UK and EZ) offer hope and are keeping the industrial demand outlook for silver optimistic.
Technical Views
GOLD
Gold prices have now broken above the bearish trend line from 2020 highs and are moving above the 1926.63 level. While above here, the near term outlook remains bullish. The next upside hurdle for gold will be the 1979.25 level resistance. To the downside, any correction lower should fund support into the 1858.28 level.
SILVER
Following the breakout above the bear channel top, silver prices are now once again testing the 27.3955 level which marked the top of the initial breakout. If prices can clear the level, bulls will be looking for a run up to the 29.8611 level next. To the downside, any drop back from here will bring the 25.0756 level support back into focus, along with the retest of the broken bear channel.
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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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