Precious Metals Monday 24-02-2020

Precious Metals Monday 24-02-2020

Gold

forex guide

Gold prices broke out to fresh highs last week, trading up to over 1604 an ounce, a price not traded since early 2013. Gold received a fresh burst of safe haven demand last week as news of a rising COVID-19 death toll in Europe rocked investor appetite.

Italy reported a spike in the number of cases there, which has now risen to 130, along with 3 further deaths from the virus. Up until this, it had been thought that the virus was slowing down. However, news of a rise in the number of cases being reported has heightened concerns once again. These latest reports come after the WHO warned that it was too early to say that the outbreak was reducing.

Equities and commodities prices saw resumed downside last week as investors moved capital out of riskier assets and back into traditional safe havens. Gold was in particularly strong demand last week due to the current weakness in the Japanese Yen which has crashed lower on fresh recessionary fears, leaving gold as the preferred safe-haven play.

Silver

Silver prices have seen firm buying also, helped along by gold-silver correlation which often sees silver prices performing in line with gold. While the downside in equities prices has had some drag on silver, the near-term outlook remains in favour of continued upside given the strong moves higher in gold.

The FOMC minutes releases last week have also helped support metals prices. While the policymakers at the Fed noted that they were comfortable with keeping policy on hold currently, there were as many as eight individual mentions of COVID-19, which the Fed highlighted as a downside risk. In light of the ongoing concerns around the virus, the US dollar could start to come under fresh pressure if investors sense that the Fed is considering fresh easing.

  Trade Idea: EUR/NZD Fib Short Play

Technical View

XAUUSD (Bullish above 1572.89)

XAUUSD From a technical viewpoint. Gold prices are trading with a lot of conviction here. The recent rally has seen price breaking above prior 2010 highs and also above 1625 where the monthly and yearly R1 sit. The bullish trend looks set to continue here. However, with momentum studies noting bearish divergence, a correction lower might materialise though bias remains bullish while above 1572.89.

Precious Metals Monday 24-02-2020

XAGUSD (Bullish above 18.0713)

XAGUSD From a technical viewpoint. Silver has started to break out of the recent consolidation now, breaking above the monthly pivot at 18.0713 and making its way back up towards the 2020 highs. With longer-term VWAP positive again, further upside remains the preferred scenario, targeting the monthly R1 at 18.8451 next.

Precious Metals Monday 24-02-2020

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.

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