Gold prices are trading mostly flat so far this week. Prices have reversed lower from initial highs posted on Monday. Price has turned lower in light of the strong rally taking place across equities markets in the final few days of the year.
Traders have been buoyed by news of the president signing off on the second COVID relief package. Following his approval of the $900 billion relief package, Trump also pushed for direct stimulus checks to be increased from $600 – $2000 per person. Since then, this was voted in by the House of Congress.
Despite the firm rally in equities and other risk assets, the downside in gold has been offset by the ongoing weakness in the US dollar.
Gold In Holding Pattern
Gold prices continue to hold back within the falling wedge pattern which has framed the correction from year-to-date highs, following a false downside break of the structure in December. Price is now back above the 1826.71 level. However, it does remain capped by the pattern top and the 1919.92 level for now.
Silver prices were also mixed, two-way trading this week with prices rallying on Monday before reversing lower on Tuesday. While the downside moves in gold are exerting a negative impact on silver, the rally in equities is helping underpin silver prices to an extent.
Looking ahead, there is plenty of two-way risk for silver. The prospect of a strong global recovery next year following successful vaccination programs helps lift demand expectations for silver. However, in the near term, silver is vulnerable to lower prices. Lockdowns and social restrictions continue to intensify to combat the new strain of the virus.
Silver Stuck In Range
Silver prices remain hemmed in by the 25.1018 – 27.4502 range this week following the breakout above the bearish trend line from year to date highs. For now, the focus remains on the further upside and an eventual move towards the 30.1117 level once again.