Gold
The trajectory of gold prices has shifted to the downside over recent weeks as both a better outlook to US-Sino trade relations and a pause in Fed tightening has seen reduced flight-to-safety and a higher outlook for the Dollar.
On the US-Sino trade relations front, the market is still anticipating a deal, in line with the ongoing news reporting around the negotiations. Both the US and China have recently spoken out in support of talks saying that communications are ongoing and a deal is expected. Should the deal come to pass within the next few weeks, this will exert downward pressure on gold as investors drive equities markets higher during a fresh surge of risk-on trading.
However, as always, there is a risk that we will get a surprise outcome. With growing fears over the unrest in Hong Kong and with China still demanding that the US cancel previously instigated trade tariffs, there are pitfalls remaining. If a deal is not done ahead of December 15th, the US is expected to go live with further trade tariffs. This would be a disappointing end to the year and would likely pull heavily on equities prices, sending gold higher on a flight-to-safety trade. With the situation still developing, incoming headlines will be key to the near term path of gold. The market is now waiting for a date to be set for the signing of the “phase one” trade deal and any further delay risks causing a reversal in global investor appetite.
Silver
Silver prices are telling a fairly similar story to that of gold at the moment. Since breaking below major support at the 16.2289 there has been a very modest recovery high though this has now found resistance and price are once again threatening to turn down. The October FOMC, released, last week was an important moment for metals. The Fed was notably less neutral than the market was anticipating and was clear in its view that, should the US economy suffer any further downside, it could move back into easing. This again presents risks either side for silver. If data performs strongly over the coming month, the Dollar will stay supported, keeping silver pressured. However, if data is seen to weaken, traders will start to reprice Fed easing expectations, pulling the Dollar down and lifting metals.
Technical & Trade Views
XAUUSD (Bearish, below 1474.70)
XAUUSD From a technical and trade perspective. Price action is starting to give bearish signals here and with longer-term VWAP negative, the near term bias remains bearish for gold. Price has retested the broken monthly S1 which is holding as resistance for now. While gold remains below the monthly S1 at 1474.70 the outlook is bearish, with a further drop down to the 1375 level (Yearly R1 retest) seen in the near term.
XAGUSD (Bearish, below 17.1753)
XAGUSD From a technical and trade perspective. Silver continues to hold beneath the monthly S1 at 17.2194, keeping the near term outlook bearish. This view is backed up by the negative longer-term VWAP. In terms of next levels, the yearly pivot at 15.6951 could see some interim bids, though, while price stays below the 17.1753 level, lower prices are likely.
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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.
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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!