(Kitco News) - Gold and silver prices are trying to stabilize on a quiet Monday, as North American markets are closed for their respective holidays.
U.S. markets are closed in recognition of Presidents’ Day, while Ontario’s Toronto Stock Exchange is closed as the Canadian province celebrates Family Day.
Although gold and silver saw disappointing price action on Friday, experiencing their worst daily loss since mid-December, some analysts note that the damage to the broad rallies has been limited.
The gold market started the week holding initial support around $2,880 an ounce. Spot gold last traded at $2,896.50 an ounce, up 0.50% on the day. Silver is also finding solid support, as it has bounced off its overnight lows just below $32 an ounce. Spot silver last traded at $32.20 an ounce, up 0.20% on the day.
Some analysts have said that silver faces a more difficult challenge, as Friday’s rejection of the breakout above $34.00 was quite severe.
However, looking beyond short-term volatility, many analysts have said both gold and silver remain a buy on dips.
“Positive oscillators on the daily chart suggest that the path of least resistance for the XAG/USD remains to the upside,” said Haresh Menghani, Market Analyst at FXStreet.com, in a note Monday. “That said, it will still be prudent to wait for some follow-through strength beyond the $32.55 horizontal barrier before positioning for any further gains.”
Alex Kuptsikevich, Chief Market Analyst at FxPro, said in a note that gold’s price action has become a little more complicated following Friday’s selloff, as buyers have become more cautious.
“On daily timeframes, gold has entered the overbought territory on the RSI index. Historically, this has led to a temporary pause rather than a reversal,” he said. “On weekly timeframes, the market still favors bulls, as the pullback over the last two months has created space for further acceleration, easing the overbought condition.”
Despite Friday’s selloff, many expect gold prices to remain well-supported as geopolitical uncertainty continues to rise.
“The precious metal appears poised to consolidate its position above $2,900, buoyed by its haven status as traders hedge their portfolios against the risk that US tariffs could trigger a multi-front trade war, thereby impairing the global economy,” said Ricardo Evangelista, Senior Analyst at ActivTrades, in a note. “Also supporting bullion prices is ongoing geopolitical instability, further fueled by the recent apparent US desire to undermine the transatlantic alliance upon which Europe has long relied for security.”
Along with geopolitical uncertainty stoked by the Trump administration, some analysts have said that gold could find additional support if economic data this week shows slowing economic activity and rising inflation pressures.
Although the Federal Reserve will release the minutes from last month’s monetary policy meeting on Wednesday, economists are not expecting any new comments on where interest rates are headed. Last week, in his two days of testimony before Congress, Federal Reserve Chair Jerome Powell reiterated the central bank’s current neutral stance, emphasizing that it is in no hurry to cut interest rates as inflation remains a threat and the labor market remains healthy.
