Gold Hits Fresh All Time Highs on USD Collapse

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Gold

The yellow metal has seen plenty of volatility this week. Price initially broke out to fresh all-time highs before reversing to end the week a little off those highs, as of writing.

The main catalyst behind the continued rise in gold prices has been the consistent sell-off in the US dollar. The currency has remained under pressure this week. The July FOMC meeting midweek, saw the Fed holding monetary policy unchanged.

However, the tone of the meeting was expectedly dovish. The Fed highlighted the ongoing uncertainty around the COVID-19 pandemic and its willingness to ease further if necessary.

Ahead of the meeting, the Fed adjusted the timeframe on some of its lending operations. This further highlighted the severity of the current downturn.

Away from the COVID-19 backdrop, ongoing tensions between the US and China have also provided a platform for continued safe-haven demand for gold. While there have been no new developments in that space, the market remains wary. A sporadic uptick in tensions could likely see gold continue to derive safe-haven support in the near term.

Gold Tests of Rising Wedge Pattern

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Gold prices traded into the upper limits of the rising wedge pattern this week with price testing the pattern top. Prices reached fresh all-time highs of 1980.82, before reversing slightly.

With the RSI showing bearish divergence on the last push higher, risks of a further sell-off are heightened. However, while price remains above the former all-time highs at 1919.92, focus remains on further upside in the near term.

Silver

Silver prices have seen their fair share of two-way action this week also. Price initially broke out above the 24.99 level before seeing a strong spate of selling kick in to take price back below into the back end of the week.

The slight reversal in sentiment in risk assets has been exacerbated in silver prices compared with gold. This is given the support silver derives from industrial stocks. Concerns over the potential for a global second wave of the virus to create a drag on industrial output translates into long covering in silver. However, with the dollar remaining under pressure, sentiment remains broadly positive.

Silver Prices Fail At Key Resistance

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Silver prices briefly pierced the 24.9982 level this week before sellers drove price lower. For now, however, while prices remains above the 20.4050 level, focus remains on a continued grind higher. An eventual break above the 24.9982 level the next preferred play.

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