Gold
The congestion in gold prices over recent weeks reflects the lack of clarity on the main factors impacting the gold market. US-Sino trade relations, as well as the outlook for the US Dollar continue to be the key themes to note for metals traders though investors have struggled to establish a strong bias in light of recent developments.
Last week, the future of the US-Sino trade negotiations appeared in peril as China retaliated to news of the US supporting a bill backing the rights of the Hong Kong protestors. China’s initial reaction including the postponing of a US naval visit as well as the threat of revoking travel rights for US diplomats. The events echoed the breakdown of talks earlier in the year, as well as the tensions around Huawei, and saw global equities benchmarks quickly lower.
While gold prices saw initial strength on the week due the flight-to-safety trade among investors, a statement from the Chinese commerce ministry repaired the market’s damaged sentiment towards trade talks. Chinese media highlighted that despite the events, trade negotiations were continuing and both sides were still focused on a deal.
This week, the main event for investors will be the December FOMC meeting. The message from the Fed last time around was that, with a view to assessing the impact of recent rate cuts, the bank was happy to remain on hold over the near-future given that incoming data supports the Fed’s current view of the economy. While data since the last meeting has been mixed, strength in key readings such as last week’s labour market data is likely to see the Fed reaffirming its wait-and-see approach, keeping the Dollar supported in the near term.
Silver
The silver market moved decisively lower last week, breaking down to prices seen last over the summer. The frustration over the health of US-Sino trade relations, as well as the resilience in the Dollar is keeping silver weighted. The FOMC meeting this week is likely to add upside for the Dollar which could provide further headwinds for silver. Positive headlines around US-Sino trade relations will be needed to help silver prices offset the negative drag from a stronger US Dollar. With the 15th December (date the US has penned for further tariffs), next week will be a key week for gauging risk flows into the New Year.
Technical & Trade Views
XAUUSD (Bearish, below 1475.12)
XAUUSD From a technical and trade perspective. Recent price action in gold has turned bearish and with longer-term VWAP negative, the near-term bias remains negative for gold. Price is sitting below the monthly pivot at 1475.12 for now, while below here, there is the risk of a deeper move down to 1378.71.
XAGUSD (Bearish, below 17.2958)
XAGUSD From a technical and trade perspective. Silver prices have turned firmly lower beneath the 17.000 handle. With longer-term VWAP negative, the bias remains bearish in the near term for silver while price holds below the monthly pivot at 17.2958. 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.
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!