Gold

After weeks of sideways action, gold prices saw a sharp move lower last week as the US Dollar recovery picked up steam. An increase in US inflation expectations as well reduced Fed easing expectations, saw the greenback trading higher over most of the week. However, the Dollar conceded some of these gains on Friday, allowing for gold prices to recover somewhat, in response to a weaker than expected set of US labour reports for January. The US saw jobs growth of 49k over the first month of the year, lower than the 85k forecast. Additionally, the prior month was revised lower to -227 k from -149k originally. Wage growth was also seen at weaker than expected levels at 0.2% versus 0.3% expected and well below the prior month’s 1% reading.

Looking ahead this week, focus will be on US inflation data along with Fed chairman Powell who speaks midweek. On the back of the recent FOMC meeting, traders will be looking for any further details from the Fed chair, which could revitalise the Dollar rally if Powell is seen ruling out further easing in the near term as vaccine optimism continues to grow.

Silver

Silver price action has been very interesting over the last week. The market broke out to its highest level since 2012 at the start of last week, driven by demand from the Reddit SWB trading movement. However, the rally reversed sharply midweek and price continued lower as the Dollar rally gained momentum. As with gold, silver prices saw a rally on Friday as the US labour reports undershot expectations. However, price is back below the 27.3955 level this week and with the Dollar looking likely to continue higher in the near term, the chances of a deeper correction in silver are looking strong. However, the continued strength in equities markets is helping offset some of this downside. US indices have broken out to fresh all time highs as a further round of US fiscal stimulus moves closer.

Technical Views

GOLD

Gold prices broke down out of the contracting triangle this week following a false break higher at the start of 2021. Price briefly pierced below the 1803.51 level before trading higher as the Dollar reversed. While price holds above the 1803.51 level, further upside is still in view. Below there, however, and the 1764.98 level is the next support to note.

SILVER

Silver prices have reversed sharply form the brief move above the 29.8611 level. Price has since traded back under the 27.3955 level and is holding below the level for now. While below here, a further move lower towards the 25.0756blevel is in store. However, while the lower level holds, price is still geared for further upside.

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