Gold

The price of gold has been devalued over recent sessions as we have seen an alteration to the outlook for US rates. The Fed cut its headline rate by a further 25 basis points at the recent September FOMC meeting. However, the market had been expecting the signal that further rate cuts would be likely in the near future. This view proved incorrect, though, as three voting members of the FOMC opposed the move. This development has seen the market pairing back its expectations for further rate reductions over the remainder of the year, keeping USD in demand.

Despite the move higher in the Dollar, lower prices across global equities benchmarks have helped offset some of the depreciation in gold. News that Donald Trump is facing impeachment enquiries in the US has unsettled investors and led to some position covering in US equities. The downward move has seen some investors moving back into gold as a safety play while the uncertainty remains.

Any further negative headlines around the Trump impeachment situation will be supportive for gold as investors steer clear of riskier assets until they have a better view on the likelihood of Trump being impeached.

This week, incoming PMI data sets from the UK, US and Europe have the potential to drive further safety inflow for gold. Last week, severe weakness in some Eurozone PMI readings stoked concerns over the health of the eurozone economy. If we see weak prints from the UK and US, this will be a poor report on the health of the global economy and could drive gold prices higher as a result. On the other hand, any upside surprises could reassure investors, allowing room for gold prices to fall further.

Silver

Bearish moves have also been noted in Silver prices this week. However, the silver market has experienced a greater level of volatility than gold due to the fluctuating US – Sino relations which have been impacting price action. Silver prices were have been subdued following earlier highs printed in the year as the deterioration in trade negotiations has hit the demand outlook for Silver. With officials from the US and China scheduled to hold further trade talks, there are upside risks to the silver outlook in the near term.

Technical & Trade Views

XAUUSD (Bullish above 1492, bearish below)

XAUUSD From a technical and trade perspective. Price is still holding above the monthly pivot currently with longer-term VWAP supporting upside still. Momentum studies also signalling room for a pickup higher. Worth noting, prices are extended on a wider range view and risk of a pull-back is seen. Any break below the monthly pivot at 1492 could offer potential short entries on a retest.

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Technical & Trade Views

XAGUSD (bullish above 17.50, targeting 19.50)

XAGUSD From a technical and trade perspective. Market is still finding support around the monthly pivot and the broken yearly R1. While we hold here, a move back into the yearly highs remains high. Longer-term VWAP still supports, continued upside remains with momentum studies showing room for further appreciation also.

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Please note that this material is provided for informational purposes only and should not be considered as investment advice. The views discussed in the above video are those of our analysts and are not shared by Tickmill. Trading in the financial markets is very risky.