Metals Markets Reverse On Treasuries Move

Gold

The yellow metal has seen plenty of volatility this week. A steep sell-off earlier in the week saw price peeling away from recent all-time highs.

However, the dip quickly found buyers and price has managed to stem those earlier losses and regain some ground. Ultimately, though, price is still ending the week lower.

The sell-off in gold was largely fuelled by a rally in US Treasuries which found decent support earlier in the week. This saw the US dollar rising. However, the upside moves in USD ran out of steam midweek, and price quickly reversed lower, helping fuel support on gold prices.

In terms of the risk environment, equities prices have remained well supported this week. This has also diluted any safe-haven demand for gold despite rising concerns over the prospect of a second wave of COVID-19.

With the Federal Reserve and other central banks committed to a path of easing, equities markets look likely to remain well supported. This could create further tension with gold prices.

Gold Finds Support at Trend Line

The gold market has seen a firm reversal this week trading lower from the 2074.77 level to retest the rising trend line from year to date lows. With the trend line finding buyers, price quickly rallied back above the broken 1919.92 support level which currently remains intact.

While price holds above here, the focus remains on further upside and a continued grind higher. Should price fall back below the trend line however, the next support zone to watch will be the 1826.71 level.

Silver

The silver market has seen broadly the same price action as gold this week with price reversing from earlier highs to retest key support levels. The rebound in silver, however, has been a little stronger.

Silver benefitted more from the strength in equities markets, particularly the industrial stocks. With the US dollar having resumed its sell-off, the bias for silver remains bullish here with a focus on continued upside.

Silver Holds Test of Support

The sell-off in silver prices this week saw price breaking below the 25.97 level to test the 23.52 level which found strong support. Price has now rallied back above the 25.97 level which, while intact, keeps the focus on further upside. Should price move back below the 25.97 level, the 23.52 level support will come into view again ahead of deeper support at the 19.62 level.