Gold
Gold has seen relatively subdued price action over recent sessions despite the big moves seen in USD. The recent patch of bad data out of the US continued last week with a disappointing Retail Sales number. Retail Sales were in negative territory over September, echoing the weakness seen in other key readings such as manufacturing, non-manufacturing and CPI. With key indicators continuing to surprise to the downside, the market has stepped up its expectations of an October rate cut.
Looking ahead this week, US durable goods and flash manufacturing PMI will both be on watch. If we see any further weakness this could be heavily bearish for USD, lending support to gold. However, the upside pressure of a weaker USD has been somewhat offset recently by improved global risk appetite which has seen diminished safe-haven demand for gold.
The US and China recently agreed a “mini trade deal” at the 13th round of trade talks held in Washington earlier this month. While the deal has yet to be signed, the market is hopeful that the two sides can keep negotiations on course and get the deal signed at the upcoming APEC meeting in Chile in November. US and Chinese deputies are due to speak this week on the phone ahead of further face-to-face talks running up to the APEC meeting. If talks continue this week that should keep risk appetite supported, weighing on gold. However, if talks fall through or headlines note any further difficulties or disagreement, this could fuel safe-haven buying of gold.
Silver
Silver prices have seen much quieter trading over recent sessions also as the market awaits fresh catalysts. Scheduled telephone calls between the US and China this week will be the initial focus and could provide some directional movement if the market gains some clarity over the situation. Beyond that, traders will be watching incoming US data. Any further weakness should see the current USD slide deepen while any significant upside surprises could stem the declines for now, weighing on metals.
Technical & Trade Views
XAUUSD (Bullish above 15322)
XAUUSD From a technical and trade perspective. longer-term VWAP is still supporting a continuation higher in line with momentum studies which flag room for a move higher also. The key level to watch in the short term will be the monthly R1 at 1530.26, if price holds a test of this level we could see a short-term double top taking prices lower. On the other hand, if we break above that level I will monitor a retest for long opportunities
XAGUSD (bullish above 17.50, targeting 19.50)
XAGUSD From a technical and trade perspective. Silver prices are continuing to consolidate around the yearly R1 for now. While we hold here, a move back into the yearly highs remains the objective. Longer-term VWAP still supports with momentum studies showing room for further appreciation also. A test of offers into the monthly R1 at 18.7790 could see initial resistance but ultimately looking for a break higher with any dip from that level likely to find support.
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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.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% 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.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!