Gold and silver retreat ahead of the EU session

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(Kitco News) – After yesterday’s excitement gold and silver start the EU session in the red. Silver was up over 8% at one point during the session but now trades at $28.18/oz as it seems $30/oz is a formidable resistance zone. Gold is looking very sideways at the moment and is trapped between $1875.11 – $1840.85.

It was also announced after the US close that COMEX is to increase the margin required to trade silver futures by 18%. This could be due to the current speculation in the precious metal as they try and curb the volatility. 

The risk sentiment overnight was firm. The Nikkei 225 (0.97%), Shanghai Composite (0.81%) and ASX (1.49%) all closed in positive territory. In the FX space, once again GBP and NZD were the outperformers. 

In terms of commodities, it was the softs that outperformed overnight. Copper is 1.11% lower in the session and the best performer is palladium which is only moved 0.08%.

AUD/USD was one of the outperformers overnight as the central bank kept rates unchanged and there was some jawboning overnight. The 3YR yield target was kept unchanged at 0.10% and it was announced that the bank would purchase AUD 100bln if bonds once the current program expires in April. With the additional purchases to be at the current AUD 5bln per week. The Reserve Bank of Australia said today the cash rate is not expected to rise until 2024, some had expected this to be earlier.

US President Biden says many areas where Republican coronavirus relief proposal does not address urgent issues. The talks will continue but as of yet, there has been no unilateral agreement. It seems that Biden wants a larger bill and is sticking to his guns on this one. The President also said he may have to enact sanctions on Myanmar after the military coup over the weekend. 

US CFTC is “closely monitoring recent activity in the silver markets”. The band on Reddit traders are now being looked into and adding to this HSBC state its ‘buyer beware’ in silver as the market movement is somewhat erratic. 

Talks to form a new government in Italy were blocked by policy issues. The talk were said to have broken down even before the coalition decided who the new PM would be. 

Looking ahead to the rest of the session highlights include earnings from the big energy companies, EU GDP and NZ employment change. 

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