Metals Rally Amidst Market Stabilisation

Gold

It’s been a much quieter week for the yellow metal on the back of the recent volatility we have seen in prior weeks. The ongoing coronavirus situation continues to dominate market news-flow and remains the key catalyst for price action currently.

Gold prices have recovered strongly off the March lows are now sitting in a holding pattern not far of the year to date highs.  With central banks around the world having announced fresh easing in recent weeks, gold prices have been supported. The Fed, in particular, has made the historic move of curing rates to just above 0% while also making the move into unlimited QE. This recent announcement has helped pull the Dollar back from the highs seen in March (index reached highs of 102.95), also helping support gold.

For now, the outlook remains mixed, but upside risks are clear. As gold reverts back to traditional safe-haven status following the stabilisation in asset markets over the last week, focus is on a further push higher. Incoming US data will be closely watched and could weigh further on USD. Traders should also keep an eye on equities prices here as the moves in gold are broadly tracking the moves we are seeing on the key US indices.

Gold Prices Holding Above Channel Top

Gold prices are trading back above the bull channel top, with the retest of the broken channel top providing support. While price remains above here, the focus is on a further push higher with a test of the year to date highs around 1700 the next technical marker to watch. To the downside, any break lower should find support into the structural support level around 1450.

Silver

Silver prices have been higher this week, benefiting from the pull-back in USD as well as the improvement in the equities landscape. Despite some loss of upside momentum, asset markets have stabilised over recent sessions, improving the outlook for silver. Silver prices also received a boost this week from Chinese manufacturing data. The Caixin manufacturing PMI saw the sector recovering into positive territory over March following a record plunge over the prior month.

Silver Prices Back Above 2019 Lows

The rally off the lows in silver has seen price breaking back above the 2015 lows of 13.6219 with the market currently challenging the 2019 lows around 14.3722. If price can establish a higher low here and move above the current highs there is a good chance of a more sustained recovery developing which would put the focus on a move back up to the 16.3502 level next.