Gold

The gold market has started the week on a softer footing as risk assets continue to draw investor appetite amidst the developing COVID vaccine news. With an array of firms having now submitted vaccines for regulatory approval, risk assets are rallying firmly and look set to continue higher. The UK government has already approved the Pfizer/BioNTech drug and are due to begin rolling it out this week. With the market focusing on the potential for a return to normal next year, the gold market looks vulnerable to further downside. Despite the downside impact from improved risk appetite, the weakness in the US Dollar is offsetting the negative impact and underpinning gold price to some extent. With Joe Biden set to be sworn into the presidency in January, traders are looking ahead to US fiscal prospects and the likelihood of further easing from the Fed.

Silver

The silver market is trading largely in line with gold this week, starting the week under selling pressure as risk assets take the forefront. The strength in equities markets is helping underpin silver here however, recent manufacturing data has surprised to the upside, helping lift industrial sentiment. With risk assets likely to continue higher in the near term, risks are tilted to the downside for silver and gold.

Technical Views

GOLD

The rally in gold price off the sub 1780 lows has seen price rebounding above the 1803.51 level. While price holds above this level, the near term outlook remains bullish. The next topside level to monitor is the 1858.28 level where there is a strong of prior swing lows creating structural resistance.

SILVER

Silver prices are trading above the 22.5950 level this week following the recent test of the level which found strong buying interest. Price has rallied to just shy of the 25.0756 level which has marked the top of the range over recent weeks. For now, price remains within the bearish channel which has framed the correction off the summer highs keeping the medium term outlook bearish. A break above the 25.0756 level is needed to alleviate the medium term bearishness.

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