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Gold and silver move lower heading into the EU session

 

·         Gold and silver are trading lower leading into the EU open. Gold looks like its heading towards the previous wave low on the daily chart at $1802.47/oz. Silver is trading at $26.70/oz and has pared nearly all of the move following the "Reddit Short Squeeze" trade.

 

·         The risk sentiment overnight was poor following a mixed lead from Wall Street. The Nikkei 225 fell 1.06%, ASX dropped 0.87% and the Shanghai Composite traded 0.44% in the red.

 

·         Looking out for the rest of the session highlights include the ECB economic bulletin, UK construction PMI, EU retail sales, BoE rate decision, US weekly initial jobless claims and comments from Fed's Daly and RBA's Lowe.

 

·         The dollar .DXY at a two-month peak was weighing on precious metals, McCarthy said, adding "central bank watch is key now ... any hint around tapering could impact gold and silver."

 

·         Benchmark 10-year Treasury yield rose to its highest in over three weeks.

 

·         The U.S. House of Representatives pushed ahead on Wednesday with a maneuver to pass a $1.9 trillion coronavirus aid plan without Republican support, although President Joe Biden said he would consider tighter limits on who would qualify for $1,400 checks.

·         The Bank of England policy decision is due at 1200 GMT. recent speculative move in silver has worn off since prices could not break above $30, although a spurt in demand from the industrial sector can boost prices again, said Hareesh V, head of commodity research at Geojit Financial Services.

·         Gold under pressure as technical breakdown puts the spotlight on $1,800

Gold has been rather choppy as of late and after having bounced around in between its key daily moving averages, price action is pointing to a breakout and it is leaning towards the downside this week.

 

Of note, price is taking out the key trendline support from the March and November lows - a level which helped to limit the daily drop in gold since last month.

 

That puts the focus on the January lows @ $1,804-17 with sellers keen to take a run at the $1,800 handle surely. A break below the figure level will then turn the attention to the November low @ $1,764.80 next.

 

As things stand, rising yields is adding to some uneasiness for gold but so far real yields are not really moving all too much so that is some relative comfort. US 10-year real yields are still stuck at -1.03% but gold is diverging slightly to the downside today.

 

Looking elsewhere, positioning is also something to consider as there has been a lack of enthusiasm in gold ETF purchases to start the new year:

 

For now, the technical picture is one that is tough to argue against as the break below the 200-day moving average (blue line) and key trendline support now highlights downside risks for gold towards $1,800 potentially.

 

February usually isn't a strong month for gold as the seasonal tailwind fades, so a push towards retesting the November low @ $1,764.80 isn't out of the picture here.

 

That said, I would expect dip buyers closer to that level with stronger conviction should price dip even further towards $1,700 in the bigger picture.

 

·         Spot gold may test support at $1,818

 

On the daily chart, gold has broken a support at $1,841, the 38.2% projection level of a downward wave C from $1,959.01.

 

Spot gold may test a support at $1,818 per ounce, a break below which could cause a fall to $1,801.

 

The metal is riding on a wave C from $1,875.26, which may travel into a range of $1,726-$1,783, formed by its 100% and 61.8% projection levels.

 

A bearish pennant points at a target around $1,726 as well. Resistance is at $1,840, a break above which could lead to a gain into $1,853-$1,875 range.

 

On the daily chart, gold has broken a support at $1,841, the 38.2% projection level of a downward wave C from $1,959.01.

 

The metal may test the next support at $1,805, with a good chance of breaking below this level and falling towards $1,769.

 

Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.

 

·         Gold to break 1810 to resume near term decline

 

Current decline in gold suggests that corrective recovery from 1810.07 has completed at 1875.59 already. Focus is back on 1810.07 support. Break will resume the decline form 1959.16 for 1764.31 low and below. Though above 1844.72 minor resistance will delay the bearish case and bring more consolidations first.

Overall, Gold is still extending the correction from 2075.18 high. Break of 1764.31 should be seen. But we’d expect strong support from 38.2% retracement of 1160.17 to 2075.18 at 1725.64 to contain downside to bring rebound.

 

·         Gold Price Analysis: XAU/USD refreshes 13-day low, eyes key support above $1,800

Gold takes offers around $1,823.70, down 0.50% intraday, while extending downside momentum during early Thursday. The yellow metal has been declining following its early week failures to cross the 21-day SMA.

 

Also favoring the bullion sellers could be January’s “double top” confirmation, with a downside break of $1,830, as well as bearish MACD.

 

That said, the gold prices are en route to a three-month-long support line, at $1,817 now, ahead of teasing the $1,800 round-figure.

 

Though, any further weakness past-$1,800 psychological magnet will not hesitate to challenge November’s bottom surrounding $1,765.

 

During the quote’s bounce beyond $1,830, a 21-day SMA level of $1,850 and the late January’s highs near $1,875/76, will be the key to watch.

 

Overall, gold is up for a fresh lag to the south but a short-term support line can offer a bumpy ride.

 

Trend: Further weakness expected

 

·         Royal Gold averages $1,874 oz gold in H2

 

Royal Gold (NASDAQ: RGLD) said today it had record revenue of $158.4 million in H2, an increase of 28% over the prior year quarter.

·         Goldman Sachs sees silver price rising to $33 an ounce, Reddit squeeze was doomed to fail

 

The bank sees prices rising as high as $33 an ounce as U.S. President Joe Biden moves forward with a plan to increase alternative renewable energy production.

 

Reference: Kitco, Investing, ForexLive, Brecoder, actionforex