Gold

The yellow metal saw plenty of volatility this week. Price rallied firmly at the start of the week, extending the recovery off the 1763.88 support.

However, sellers stepped in ahead of the 1826.71 level and saw price turn sharply lower. Losses were amplified on Thursday as the US Durable Goods number for January came in well above expectations at 3.4% vs 1.1% forecast.

Following on from a higher than expected Retail Sales number for January, this latest data has once again turned the focus back to the US recovery.

With US Treasury yields rising as inflation expectations tick higher, there has been a growing conversation around the prospect of the Fed removing monetary easing ahead of its currently pegged timeline.

However, Fed Chairman Powell, this week pushed back against this idea in his semi-annual monetary policy report to the senate banking committee.

Despite Powell’s comments, it appears the market is taking a different view with US Treasury yields breaking out to fresh highs, putting further pressure on gold.

Gold Testing Key Support

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The recovery rally in gold this week failed ahead of the 1826.71 level, where the bear channel top was adding further resistance. Price is now turning back towards the 1763.88 level. This is a key level for gold prices. A break lower here will open the way for a run down towards the 1700 level next. Beyond that the 1634.74 level where the bottom of the channel sits.

Silver

Silver prices haven’t quite seen the same volatility as gold prices this week. Although price action has been broadly similar with the market advancing at the start of the week before reversing as US yields broke out to fresh one-year highs on better than expected data.

The resilience in US equities indices is being tested here with stock markets turning lower again this week. Should the current sell-off develop deeper, this could spur further downside in silver prices.

For now, silver prices are being underpinned by the ongoing optimism linked to the US vaccination drive which looks on course to deliver a return to normal over the second half of the year.

Silver Holding At 27.4502

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Silver prices continue to oscillate around the 27.4502 level. Price has remained above the level this week, keeping the focus on further upside in the near term. However, momentum is very weak, and bearish divergence in momentum studies is flagging downside reversal risks.