Gold and Silver's shining future
American indices closed the trading session on Monday with 7% growth on SP500 and 7.7% on Dow Jones. Both indices closed above the levels of the previous rebound at the end of March, further fueling the growth of foreign bourses at the start of trading on Tuesday.
The positives come from several directions at once. For the second day in a row, the number of new COVID-19 infections in the world is decreasing. In most European countries, the trend for reduction is confirmed. This is evidence that quarantine measures have the right effect by knocking down the spreading wave.
At the same time, the authorities of the most affected countries are not tired to declare new funds to fight the consequences. Italy has announced a new package of measures worth 400 billion euros to support small and medium businesses, increasing the overall package to more than 800 billion (about 50% of GDP). US lawmakers are considering another package "for at least $1 trillion" in addition to the $2.6 trillion. Federal Reserve said it would allow banks to cash out loans issued under the program of assistance to small and medium businesses - a way to put money into the economy quickly.
These measures reduce the pressure on the markets, causing some weakening of the dollar. Of course, it's too early to try to estimate whose incentives will be larger and faster to enter the economy. The answer to this question will help to understand the future trends of the currency market. Initially, the side, whose "supply" of currency will increase more strongly will feel worse. Read more...
Gold: Bulls seize the control
Gold gaped lower on the open to hold good support at 1602/1597 & then took off through 1624/26 beating 1633/35 & the last swing high at 1642/43 to hit 1671 over night.
Silver beat key resistance at 1450/55 for a buy signal targeting 1500/10, 1535/40 then 1560/65. We missed this target by only 11 points.
Gold bulls seize control. A dip from 1671 meets minor support at 1654/53 with best support at 1645/42. Try longs with stops below 1638. An unexpected break lower risks a slide to 1635/34 & support at 1631/29.
1671/72 does not appear to be a strong resistance levels so be ready to buy a break higher targeting 1686/88 & is more resistance at the bull market high 1700/02. A break above here is obviously positive. Read more...
Gold corrects from multi-week tops, slides further below $1650 level
Gold finally broke down of its Asian session consolidation phase and dropped to fresh session lows, around the $1645 region in the last hour.
The commodity failed to capitalize on its early uptick to the $1674 region, or near four-week tops and witnessed a modest intraday pullback. A further improvement in the global risk sentiment, as depicted by some strong follow-through positive move in the equity markets, was seen exerting some pressure on traditional safe-haven assets, including gold.
The risk-on mood was supported by the latest optimism over falling number of COVID-19 cases from the United States, Italy and Spain. This was further reinforced by a strong rally in the US equity markets, which further contributed towards driving flows away from the non-yielding yellow metal and contributed to the intraday slide.
Meanwhile, a weaker tone surrounding the US dollar, which tends to undermine demand for the dollar-denominated, might turn out to be the only factor that might help limit any deeper losses. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent rally might have already run out of the steam. Read more...
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.