Gold

It’s been a very quiet week for gold traders.

The market has remained tightly congested, sitting within the prior week’s range. Conflicting directional drivers effectively capped the metal from making a move one way or another.

On the one hand, the continued sell-off in global equities markets has fuelled a surge in safe-haven demand for gold. Equities have come under heavy selling pressure this week over fears of a third wave of COVID potentially underway in Europe.

Several EU countries have announced further lockdowns or an extension of measures in response to rapidly rising infection numbers. Meanwhile, news that the blockage in the Suez Canal could be costing the global economy up to $10 billion a day is also weighing on risk appetite.

Despite the upside support from a rise in risk-averse trading, however, gold has not been able to gain momentum. This comes as the rally in the US dollar has taken center stage this week.

The dollar has been the bigger beneficiary of safe-haven demand. This is due to the significantly improved economic outlook there thanks to the stronger vaccination progress.

Given the downside risks for equities and the likelihood of the dollar staying strong in the near term, the outlook appears neutral-to-bearish for gold prices heading into Q2.

Gold Prices Hold Mid-Channel

For now, gold prices continue to sit within the middle of the bearish channel from last year’s highs. Price is still holding above the 1700 handle for now.

However, in line with the bear channel, the focus is on a further push lower in the near term towards 1634.74 next. To the topside, the 1763.88 level is the next key resistance to note, with the bear channel top coming in just above.

Silver

Silver prices have seen a more direct move this week. The strength in USD and the weakness in equities combined to weigh on price.

Silver doesn’t see the safe haven demand that gold does. Therefore, it typically isn’t impacted by those flows.

However, the weakness in equities markets and the impact of the Suez supply disruption is taking its toll on silver here, sending price lower. Price is holding at support for now.

But, if the USD is able to properly break out here, silver looks primed for further downside.

Silver Breaks Bullish Channel

(Click on image to enlarge)

The sell-off in silver prices this week has seen price breaking down below the rising channel support line. Price is now sitting on a ledge of support at the 25.45 level.

While this level is currently seeing decent buying, the outlook is skewed to the downside for silver with the 22.25 level the next support to note.