Gold & Silver Slump on Dollar Rally

Orbex Weekly Metals Wrap

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Gold

Despite some initial highs seen earlier in the week, buying pressure has reversed in the yellow metal for the week.

This caused the safe-haven to go negative on the week following a large sell-off on Wednesday.

The sales seen mid-week were a result of the impressive rally seen in the US dollar. The rally came in response to the ADP employment number which recorded a rise on the prior month.

The reading is a closely watched measure used to gauge the headline NFP reading (due later today).

The market is expecting a strong reading and sentiment has been lifted further by a set of weaker-than-forecast weekly jobless numbers posted yesterday.

Should we see another strong number, the US dollar rally is likely to continue. This will likely keep gold sentiment weighed to the downside.

The strong rally in equities this week has also been a headwind for gold. US indices are seeing firm buying across the week, leading to an outflow of demand for the lower-yielding gold.

Gold Prices Holding on Trend Line Support

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Gold prices continue to range within the recent correction from the 2074.77 all-time highs. Price has been underpinned by support at the 1919.92 level, along with the rising trend line. This is keeping the focus on further upside in the near term.

Should we see a break below this level, however, the next support region to watch will be the 1826.71 zone.

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Silver

The silver market has seen fairly flat trading this week also, mapping the moves seen in gold. Initial demand saw the metal trading weekly highs of 28.8994 before reversing to take the market negative on the week.

Along with downside moves in gold, silver prices have been curtailed by the fresh strength in the US dollar. While the upside in equities has certainly offset any stronger selling in silver, the outlook remains clouded as the upside moves in USD draw increasing attention from traders.

Today’s US economic releases have the potential to set the near-term tone for both metals. Any significant volatility in the US dollar will certainly be reflected in the metals complex.

Silver Prices Hover Around

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Silver prices continue to hang around the 27.4502 level, having broken back beneath it this week. Following the correction lower from the 29.80 level silver prices have found support at the 23.52 level and been drifting higher since.

For now, the focus remains on continued upside in the near term with the 29.80 level marking the key resistance to be broken. To the downside, 23.52 is the key support zone to watch ahead of the rising trend line from year to date lows.

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