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Gold and Silver Daily Analysis

Daily Market Analysis

The coronavirus had a downward effect on most commodity prices. 

Since 20 January – the date of confirmation of human-to-human transmission – prices of energy and industrial metals have fallen significantly. 

The outbreak has grown exponentially since and is expected to impact the global economy dramatically during Q1. Data coming out over the next few weeks on the state of the Chinese economy will turn out to be decisive for commodity price trends. 

Most output ‘lost’ in Q1 will be made up later. In addition, likely stimulus measures will support a recovery in growth. The macro climate will eventually turn for the better again. A rebound in confidence and modest dollar weakness by the end of 2020 will be supportive of cyclical commodity prices. 

Nevertheless, downside risks will remain high, including from further spreading of the coronavirus, re-escalation of the trade war and a weakening in corporate investments.

 

Gold Current trend

This week, gold stays within a confident uptrend. As the CFTC data show, the number of open net speculative positions amounted to 308.0K, which is less than 330.1K last week, which indirectly indicates a declining demand for asset exchange contracts.

The reduction can be explained by the relatively high cost of the contracts. Gold is denominated in US currency, and since the USD Index, which reflects the value of the dollar against other currencies, is at extremely high levels around 99.30, the price of gold in foreign currency has become much higher than it was a week earlier.

However, the increased demand for “shelter assets” supports the metal quotes at current high levels at 1590.0, and the situation will not change until tensions caused by coronavirus begin to subside.

Support and resistance

The price of the asset has reached the resistance line of the broad rising channel and is currently consolidating around 1600.00. The Alligator indicator is directed upwards, and the range of EMA fluctuations is expanded, which indicates a high potential for upward movement.

Resistance levels: 1611, 1630

Support levels: 1605, 1600, 1593.0, 1563.0.

Trading tips

After growth or consolidation above a local maximum around 1605.0, long positions with the target at 1630.0 will be relevant. In this case, stop loss is below the resistance line, at the level of 1595.0.

Short-term tip

Rejection from 1611 can give an idea for beginning of the new correction. Exact signal with entry and exit strategy will be shared on our Live Trading Room (XM Basic Room 1:00 PM and 5:00 PM GMT+2)

After a reversal and decrease or consolidation below local resistance at 1593.0, it is better to open sell positions with the target at 1563.0. Stop loss is above the support level, around 1600.0.

Implementation period: Middle-term (7 days or more)

Similar to the Gold, Silver broke the resistance level 18.345. If the price closes above 18.345 this can expose the price to new further rally. 

H4 close below 19.30 can be a sign for correction down to 18.10 key support level. 

Breakout aboe mentioned 18.35 level will be sign for long opportunity up to 18.50, 18.65. 

For more detailed analysis, trading ideas, strategies with exact Entry price, SL and TP levels join us on TradeRoom.

 

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