Summary:

•  Gold has dropped today to trade back near its pre-NFP levels 
• US CPI tomorrow could decide whether key support around 1305 holds
• Divergence apparent in Gold and Silver

There’s been a little weakness seen in precious metals today with losses in the range of 0.3-0.6% currently seen in Gold, Platinum and Silver. First off if we start with Gold, we saw the market move off its weekly lows on Friday following the NFP report which showed a lower than expected rise in average earnings, but despite this it ended the week little changed. 

Today the price has failed to hold on to the bulk of those gain which saw a rise of approximately $10 in the hours that followed the release and the market is now back below 1320. 

 The gains seen following NFP have faded and price has drifted back lower today. Source: xStation

The market appears to be lacking a clear direction in the short term, but taking a step back and looking at the bigger picture we could soon be set for a decisive move. The region from 1303-1312 has provided a fairly solid floor for price since the start of the year and any break below here may be seen as an end to the current range bound trade from 1303-1366. Alternatively, any bullish developments in this region and constructive price action (EG bullish engulfing candlestick etc) would present possibly attractive opportunities to enter long positions. 

The main data point for this market this week could be tomorrow’s US CPI, out at 12:30 GMT – an hour earlier than usual due to the US adopting daylight savings time over the weekend.  

 Gold remains above a key line in the sand from 1303-1312. This is an important region to watch out for going forward. Source: xStation

Turning our attention to Silver, it is apparent that a divergence form Gold is currently in play with the former under performing the latter. Over the past 6 months these markets have enjoyed a fairly good positive correlation with a notable divergence at the end of October swiftly closing with Silver falling lower.

 Silver has underperformed relative to Gold of late. Could we get a convergence going forward? Source: xStation

The current divergence is of similar scale and would require Silver to rise to around 17.25 or Gold to fall to around 1290 (or some combination of the two) to see the two markets converge once more.