Metals Rally As Markets Recover

Gold

The yellow metal enjoyed a much better session this week as prices rallied firmly.

The gold market has now traded back up to 1631.67 (as of writing) from last week’s 1450.13 lows. Fuelling the recovery was the broader rebound across asset markets this week.

Equities and commodities prices have been firmly lifted on the back of the slew of central bank easing we have seen in response to the coronavirus outbreak.

With nearly all G10 central banks having announced easing, and the Fed announcing that it will now run unlimited QE, the markets have finally started to stabilize following weeks of heavy selling. Gold prices are now not too far off their yearly highs around the 1700 level following this week’s recovery.

Gold prices had seen a lot of selling due to the need for traders to fund margin calls on losing equities trades. With equities markets recovering here, however, gold prices have been able to regain upside.

Gold Prices Break Back Above Bullish Channel

The rally in gold prices this week has seen the market breaking back above the top of the bullish channel, encouraging the view that further upside is likely. For now, the 1700.000 remains the key upside marker and a break of this level would be a strong bullish signal.

To the downside, the main support is down at the 1381.74 level with the bull channel low coming in beneath that.

Silver

Silver prices have enjoyed a firm rally this week also. Price recovered from last week’s lows below the 12.0000 level to trade back up to above 14.4430 (as of writing).

With US industrial stocks rallying this week, silver prices have been lifted. News that restrictions on movement in the Hubei province in China (epicentre of the coronavirus) is also helping boost sentiment.

China has reported no new cases of the coronavirus for a week now, encouraging optimism among traders.

Silver Recovers Above Major Support Level

Having traded as low as 11.6700, silver prices have now recovered above the 13.6219 2015 lows and are challenging the 14.3722 level. If price can hold above this level, a further recovery higher will be on focus, with the 16.3505 level as the next main structural zone to watch.

The move into the lows saw bearish divergence on the RSI indicator. Price action-wise, this could prove to be a point of capitulation from which the market will start to reverse higher.