Gold

The gold market continues to hold in the recent consolidation pattern which has persisted over the last five weeks, following the heavy sell-off over the first week of November. Some important developments to note over the recent week, which could impact the course of metals trading this week.

First and foremost, the market received details of a US-Sino trade agreement last week. There had been chatter over the week that a last-minute deal, aimed at avoiding further US tariffs, was likely to come ahead of the week. The official announcement was made on Friday, accompanied by some insight into the terms of the agreement. The deal is broadly In line with the initial terms publicised in October following the October 10th meeting which first yielded the deal. Simply put, China has agreed to step up its purchases of a range of US products, headlines by heavy increases in US farm product purchases, in return for the US reducing tariffs across the board. Some tariff levels has been maintained to serve as leverage for keeping China engaged in delivering a second deal. Despite initial risk-on trading, a reversal in sentiment, seen in response to the underwhelming details of the deal, saw gold trading higher in the close on Friday as safe haven demand returned.

Silver

The FOMC meeting last week also helped keep gold and silver in demand. The Federal Reserve delivered a meeting statement broadly in line with the meeting, reiterating its guidance that although the headline policy rate is viewed as appropriate for now, the bank will continue to monitor incoming data. The read here is that the Fed is keeping its options open and if data started to worsen, or rather, continues to worse, it could ease further. The meeting also saw the bank announce that it will continue to buy USTs well into 2020. Altogether, the meeting was not particularly bullish for the greenback and investors have continued to buy gold, which has helped keep silver prices supported.

A range of global manufacturing PMIs due this week will be closely watched by metals traders. The downward trend this has seen readings in the UK, US and Europe falling into contractionary territory. Any further weakness in readings this week should keep risk appetite constrained, leading metals higher.

Technical & Trade Views

XAUUSD (Bearish, below 1475.12)

XAUUSD From a technical and trade perspective. Consolidation continues in Gold. Price is sitting below the monthly pivot at 1475.12 for now, while below here, there is the risk of a deeper move down to 1378.71, in line with negative longer-term VWAP. If we break above the pivot, however, I will reassess.

gold-2.png

 

XAGUSD (Bearish, below 17.2958)

XAGUSD From a technical and trade perspective. With longer-term VWAP negative, the bias remains bearish in the near term for silver while price holds below the monthly pivot at 17.2958. In terms of next levels, the yearly pivot at 15.6951 could see some interim bids, though, while price stays below the 17.1753 level, lower prices are likely.

silver-2.png

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 71% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.