Gold

The gold market has started the week in the red, extending the losses seen into the bank end of last week as the US Dollar receives better demand so far on Monday. While gold has fought to recover over the last month following the test of 1858.24 support, the move has been laboured and without conviction. The weakness in the Dollar over that period has helped though the market is lacking strong directional flow as uncertainty persists ahead of the upcoming US elections next month.

Democrat candidate Joe Biden is currently leading the president in national polls and in most swing state polls. However, markets are wary of attaching too much value to these poll readings given the shortcomings they have experienced in recent years.

Away from the elections, the developing second wave of COVID-19 remains the key fundamental driver to note. Growing concerns of an escalating situation over the Western winter should drive safe haven demand into gold though the extent to which gold benefits from ant risk off flows will depend greatly on the movement in USD. During the first wave of COVID, gold prices actually fell in line with the rout in equities markets as traders were forced to liquidate positions to cover margin calls in losing equities positions.

Silver

Much the same with gold, silver prices have started the week under offer as the resurgent strength in USD dominates price action so far on Monday. The weakness in equities markets is also having a depressing effect on silver as we start the new trading week. On Friday, the latest set of manufacturing PMIs from the eurozone, US and UK showed that momentum has slowed drastically with only the eurozone beating estimates. Given the concerns over the potential for further lockdown measures this winter, this raises questions over the demand outlook for silver going forward.

Technical Views

GOLD

From a technical viewpoint. Despite having broken above the corrective bearish channel, gold prices have failed to resume upside momentum. Price is currently stalled at the 1926.63 level, which has developed as a key, interim pivot. Above here, the 1979.25 level is the main resistance while to the downside, main support is at the 1858.28 level.

SILVER

From a technical viewpoint. Silver prices remain within the middle of the corrective bearish channel and are now turning lower again having failed once more at a test of the 25.0756 level. This remains the key resistance to break and while below here, the market is vulnerable to a move down to the bottom of the bearish channel.

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