Gold
The yellow metal starts the week firmly under pressure as the US Dollar rally takes centre stage. A set of much stronger-than-expected August retail sales last week has seen Fed tapering expectations brought back into focus. The greenback swiftly recovered off the lows traded ahead of the data with the Dollar Index now trading back up to just shy of the August highs.
Despite the strident rally in the Dollar, however, gold prices have remained underpinned somewhat from risk flows. Equities, and the roader risk complex, have taken a heavy hit over recent sessions as fears of contagion from the Chinese Evergrande situation weigh on risk sentiment. Additionally, resurgent COVID fears are adding to the risk off tone as we start the week, meaning that downside moves in gold have been somewhat offset for now.
Looking ahead this week, the big focus is on the September FOMC meeting. While the Fed is not expected to adjust policy this time around, the market will be looking for a clear signal that tapering is coming in Q4, most likely at the November meeting. Such a development would likely further the USD rally, putting gold under greater pressure.
Silver
Silver prices are fighting to bounce back off the Asian session lows as of writing. The metal started the week under pressure but has seen buying kick in across the European open. As with gold, the main story here is the rebound in the US Dollar which is weighing on the metal’s complex. The only hope now for silver in the near term is for the Fed to deliver a muted message this week, disappointing USD bulls.
Technical Views
Gold
The sell off from the 1826.71 level has seen the market trading back down to test the 1763.88 level and broken bear channel top. While this level holds, the region might prove to be the right shoulder of an inverse head and shoulders pattern, suggesting room for a continuation higher if price can get back above the 1826.71 level.
Silver
The sell off in silver from the test of the channel top and 24.0073 level has seen the market collapsing back down to test the 22.3205 level. While this level is holding as support for now, the focus is on further downside in the near term with 21.2174 the next level to watch. Worth noting bullish divergence into this low, raising risks of a double bottom.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.