Gold and Silver Rebound Off Lows

The metals market is starting the week on a better footing with both gold and silver seeing decent demand across the European open on Monday. Both metals has been under pressure early last week before reversing higher into the end of the week as risk assets plunged Gold saw a fresh wave of safe haven buying, which also helped lift silver prices, on the back of the FOMC and ECB meetings last week. The ECB in particular was more hawkish than expected, warning that rates will have to rise significantly in order to help tame inflation. The bank’s outlook added further pressure to risk sentiment which had already been shaken by the Fed forecasting rates to be higher for longer.

Interestingly, the rebound in both gold and silver came despite the Dollar also turning higher across the back end of last week. Looking ahead this week, we have very little in the way of key US data to drive markets. US PCE on Friday will be the only release of note and, in line with inflation, is expected to have weakened last month. With little tier-one data and with the Christmas holiday looming, this week is likely to prove a quiet on across the board.

Technical Views

Gold

Gold prices have been continuing to grind higher recently. However, price action around the 1791.63 level has become laboured and momentum studies are flagging bearish divergence, suggesting risks of a move lower. Should price fall back below that level, 1722.37 is the next support to note. While above here, however, bulls keep focus on the 1871.04 level next.

Silver

Silver prices were recently rebuffed at the 24.0073 level with the market dropping back sharply towards the 22.3205 level support. On the back of recent bullish moves, while price holds above that support level, focus is on a continued push higher and a break of the 24.0073 level. However, we have seen bearish divergence into highs, suggesting risks of further drop lower. Below 22.3205, 20.6398 is the next support to note.