Gold

The gold market has seen better demand over recent sessions in response to the weakening in the US dollar. The Dollar came back under pressure last week amidst heightened political uncertainty ahead of the US elections. A messy and chaotic first presidential debate has weakened trump’s chances of re-election with Biden generally seen as having won the debate by a small margin. News of Trump’s COVID diagnosis and subsequent hospitalisation then exacerbated investor uncertainty and saw safe haven flows moving back into gold away from the US Dollar.

The US labour reports on Friday then added further downside pressure for the US Dollar. The headline NFP number came in at 661k vs 900k expected. While the unemployment rate was seen falling lower to 7.9% from the prior 8.4%, average hourly earnings were particularly weak at just 0.1%, undershooting expectations of a 0.5% reading. The data has raised concerns over the trajectory of the economic recovery and shows that the rebound in the labour market has weakened materially. With fears over the potential need for further local lockdowns, given the rise in COVID cases, the outlook is deteriorating now which is likely

Silver

Silver were slightly firmer last week also, tracking the moves in gold. The silver has suffered recently at the hands of a stronger US Dollar. However, the reversal in the global reserve currency last week has allowed silver some scope for recovery. Generally firmer equities prices have also helped support sentiment in the silver market. However, uncertainty over the health of the US economy creates means that the outlook for silver has weakened a little. The ISM manufacturing number was weaker than expected last week, reflecting the loss of momentum in the economy and echoing the weaker than expected.

Technical Views

XAUUSD (Bullish above 1858.28)

From a technical viewpoint. For now, gold prices remain contained within the corrective bearish channel which has framed the sell off from all-time highs. Price recently found support at a retest of the 1858.28 and while above there the near-term bias remains bullish with bulls looking for a breakout above the bear channel.

XAGUSD (bearish below 25.0756)

From a technical viewpoint. Silver prices recently found support a test of the bearish channel low. While price remains below the 25.0756 level the bear channel looks likely to develop further. To the topside, the key level to break is the 27.3955 region where the bear channel top is found also.

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