Gold

The gold market has had a disappointing two months for bulls with price correcting lower from the 2076.12 level to trade current lows around 1861.62. The market has been under pressure recently as a result of the rebound higher in the US Dollar. The Dollar closed out one of its best weeks in months last week as the combination of safe haven inflows and better US data fuelled demand.

On the data front, US manufacturing was seen rising higher again this month along with the services PMI index rallying also. Over the week, comments from various Fed officials also prompted dollar buying. Fed’s Evans, who is due to become a voting member next week, said that further easing might not be what the economy needs and floated the idea of a rate hike.

Silver

As with gold, silver prices have fallen victim to the rebound in the Dollar over recent weeks. Despite the Fed outlining a shift in its inflation targeting strategy, the Dollar has been trading with much better demand recently. Dollar buying looks set to increase into the month end as corporates adjust their dollar hedges. Weakness I equities prices over recent weeks has also weighed on silver prices which are often impacted to some extent by the movement in industrial stocks given the demand for silver which comes from the industrial sector. There was some good news for silver over the last week, however, with the latest manufacturing readings from the UK, US and Eurozone showing another firm increase over August, reflecting a continued pickup in activity. This is good news for the silver demand outlook though this is currently being offset by rising fears over the potential need for further lockdown measures given the increasing virus numbers seen across many countries including the UK and many European countries.

Technical Views

SILVER (Bullish above 19.6076)

From a technical viewpoint. Silver prices are currently testing the bottom of the corrective bearish channel. While the bearish channel has scope to continue in the near term, while price remain above the 19.6076 support, the medium term view remains bullish.

GOLD (Bullish above 1824.56)

From a technical viewpoint. Gold prices continues to correct lower within the local bullish channel which, for now, can still be viewed as corrective within the bull trend. Price is currently sitting on the 1858.28 level lows, just above the deeper 1824.56 level. While above here the medium-term outlook remains bullish.

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