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Bright Outlook on Gold and Silver Price

18 January 2021

Gold has found support in the Daily Ichimoku cloud – whilst occasionally threatening to push lower, the price has recovered to within the trading band between US$1829-1861.

The reason for gold taking a thump mid-week was the reaction of bonds to Democrat spending plans, which a shaping up as a US$1.90 trillion package. 10-year Treasuries dipped sharply in price, taking the yield up to a daily high of 1.18 pct on the 12th. (This level is close to trendline resistance on the Daily yield chart, and also reflects two targets to 1.18 pct. and for now the weakening move looks like it may have played out in the short term. The Weekly chart of 10-year yields currently shows a close near the open in a sort of ‘inverted hammer’, which suggests yields have been beaten back.) That last effect may have been the result of Fed Chair Jay Powell trying to communicate that ‘now is not the time to be talking about exit’ from Fed Bond buying.

The Dollar Index (DXY) rallied up to 90.728 on Tuesday which also created a drag on gold. The Dollar Index is currently higher than the weak monthly open. Short term the market may dip to 88.80.

Although bond market behaviour has created a sharp-intraday sell-off, triggering some brisk liquidation mid-week, the market has managed to recover and consolidate so far. Gold in AUD has a positive outlook medium-term with many new targets created since mid-week that suggest a move back towards 2405-2420.

Silver is bumping up against short-term resistance but above US$25.80, look for higher.

18 January 2021: Gold Daily Ichimoku Chart

Short to medium term Point and Figure

18 January 2021: Gold Point and Figure Chart