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Moving On Up

09 April 2021

Precious Metals are trending higher after the US labour department reported larger than expected increases in unemployment claims, seemingly causing investor concerns about the recovery of the world’s largest economy and shifting their focus to safe-haven assets.

The price picked up again this week signalling that we may be seeing gold moving up and away from the late downward trend. Short-term price movement shows the gold price is currently trading at USD $1755.70, up from the USD $1675.00 support level on March 30, 2021.  Following the massive pullback off the August 7 2020 high, when gold hit $2859 AUD, it is now sitting nicely at the $2300 AUD level with AUD spot at $2299.40 as of 2:00PM today. Many investors are seeing this as a buying opportunity, not seen since before Covid. Timing is everything, and now may be the time to be preparing for growth.

Gold Spot Price

The 20-day moving average (green trend line) is trending higher. If this crosses above the 60-day moving average soon, we would have a strong signal for a continuation of upper trend momentum. Watch this space!

Gold in AUD is currently trading close to 2300 in AUD with the support at $2100 and resistance at $2350. Overall it looks very similar compared to the USD chart. The current price is touching 60MA (the Red line) advancing slightly quicker due to the pull of AUD against USD.
Like gold, the current performance on Silver is showing an upper trend on the daily chart with a possible move to a higher target of $34 by next week. Right now, the trend is bullish with a move outside of the regression trend line channel. The $34 target will provide some strong resistance, meaning again that we are seeing a great opportunity to get on board and benefit from expected growth. By the end of the US market, the last candlestick closing will determine the momentum for early next week. With the current market structure, to really see a strong impulse wave, the resistance level of $39 from February highs must be broken. 

In addition to a positive technical outlook, fundamentals for Silver are also positive. Central banks continue to add easy money to the financial system, increasing inflation. As clearly indicated by Fed chairman Jay Powell and US president Joe Biden the stimulus will be here and stay until the economy recovers from the Covid pandemic.
The Aussie Dollar looks to breakout with lower US Treasury yields and increased unemployment giving a bearish outlook for the USD. US  10-year bond yields, which have been really strong, are beginning to regress down back to the 1.63 level, down from the high range of 1.77.

In Other News 
Vaccine rollout delays in Australia have left the public highly sceptical about the vaccination strategy that was presented by the government. The leaders at the National Cabinet will be discussing the rollout today and what delays will mean in terms of the nation reopening to the world; making it clear that borders will remain closed until the majority of the population has been vaccinated. Breaking news this afternoon that NSW Health placed a temporary pause on administering AstraZeneca vaccines. Continued uncertainty may soon be seen reflected in the markets – we may not yet be in the clear.

Over the last few weeks, major concerns were raised given the major spike in bond yields; a scary scenario for equities with pressure around the US and European markets. The European central bank and the Federal Reserve signalled that interest rates will continue to remain low unless the forecast for inflation hits earlier than expected which may force the Central banks to raise interest rates. Given the current economic climate, Central banks have made their positions quite clear that interest rates will remain low with continue bond buying programs to remain active until strong economic growth reappear.