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Precious metals under pressure towards key support as risk appetite builds

  • Risk appetite returns to markets amidst Brexit dal progress in the 11th-hour
  • Markets wait for some form of clarity in the ‘Phase-1 deal’. 
  • Silver and Gold heading towards a test of trend-line supports. 

Precious metals are taking a backseat as risk appetite returns while various geopolitical developments make for positive headlines this week. Gold prices edged lower on Tuesday, falling from a high of $1498.52 to a low of $1477.26 on a spot basis.  

Futures, on the other hand, marked their lowest settlement for the month so far, falling $14.10 to settle at $1,483.50 an ounce on Comex. The white metal’s December contract, or Dec Silver, lost 32.6 cents, or 1.8%, to finish at $17.384 an ounce.

Risk appetite returns

While markets wait for some form of clarity in the ‘Phase-1 deal’ between the US and China, Brexit developments have been highly positive for risk sentiment in markets on Tuesday, weighing on the price of Gold, Silver and safe havens in general. There has been news that the  EU and UK were close to agreeing on a draft Brexit deal, a deal that could be signed and delivered as soon as tomorrow and in time for the EU summit. However, the draft is going to be dependent on getting support from the DUP if it is to get through Parliament which could rock the apple cart. 

As for stocks, we are into earnings season again and investors appear to be positive about that which is also stipping the appeal of safe havens. Meanwhile, for trade updates, there were headlines that included comments from a spokesman for China’s foreign ministry who was quoted as saying Washington and Beijing were “on the same page.”

Gold levels:

Technically, the price is trading within familiar ranges but is leaning with a bearish tendency while edging lower below the  21 and 50-day moving averages.  Bears are lining up for a run below the trendline support where a test of the 50% mean reversion of the late June swing lows to recent highs around 1460/70 will be on the map. Failures here will open the early August lows down at 1400 the figure. On the upside, bulls seek closes above the 1500 level ahead of the 1520 level and the1535 resistance target. 

Silver levels:

While below the 18.60/80 before a run to the 19.60s and September highs, the bears are in control. Technically, the price of Silver cannot hold above 21-day moving average on attempts this week so far. The trend-line support is coming back into focus and a break there will bring back prospects of a run back to a 61.8% Fibonacci level down at 16.10 – guarding the 200-day moving average which is resting in the 15.90s. 

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