GOLD PRICE OUTLOOK:Gold costs ranged above a key help degree at US$ 1,900 amid souring sentimentThe US election might function a
GOLD PRICE OUTLOOK:
- Gold costs ranged above a key help degree at US$ 1,900 amid souring sentiment
- The US election might function a catalyst for gold buying and selling subsequent week
- 79% of the retail gold merchants (inside IG)are in lengthy positions, barely increased than per week earlier than
Gold costs consolidated at above US$ 1,900 this week amid souring market sentiment on account of a resurgence in coronavirus instances across the globe. The absence of geopolitical catalysts and a comparatively muted US Greenback index have led gold costs to consolidate inside a good vary between US$ 1,900 – 1,910. Some merchants might desire to sit down on the sidelines till the political skies are cleared after the US election, which is just one week from now.
Though Democratic presidential candidate Joe Biden seems to have a cushty lead in nationwide polls, the potential tail danger of a Trump-win situation can’t be uncared for. This renders the risk-averse US Greenback prone to a robust haven bid ought to the election end result derails from the ballot forecasts. A strengthening US Greenback is prone to weigh on valuable steel costs, particularly when ‘danger off’ sentiment is prevailing.
| Change in | Longs | Shorts | OI |
| Day by day | -1% | 4% | 0% |
| Weekly | 5% | -4% | 3% |
The medium-term outlook, nevertheless, appeared biased in the direction of the upside because the Fed continued to develop its stability sheet, albeit at a a lot slower tempo in comparison with earlier this yr (chart under). The Federal Reserve stability sheet hit an all-time excessive of seven.177 trillion in October, surpassing the earlier document seen in early June. Ample liquidity and ultra-low rates of interest might buoy the medium-term outlook for valuable steel costs, albeit short-term stress stays.
Supply: Bloomberg, DailyFX
Technically, gold costs got here off the all-time excessive (US$ 2,075) in early August and have since entered a three-month consolidation. Costs tried to stabilize since finish September after discovering a robust help at US$ 1,870 (the 76.4% Fibonacci retracement).
Gold costs have additionally shaped just a few bearish harmonic pullbacks (highlighted in black straight strains) earlier than getting into into an “Ascending Channel” in October. Quick help ranges may be discovered at US$ 1,900 (50-Day SMA), adopted by US$ 1,883 (decrease Bollinger Band). A narrowing Bollinger Band width means that tight range-trading might proceed.
Gold Value – Day by day Chart
IG Shopper Sentiment signifies that retail gold merchants are closely leaning in the direction of the lengthy facet, with 79% of positions internet lengthy, whereas 21% are internet brief (chart under). As gold costs consolidate, retail merchants have trimmed lengthy (-1%) positions and added brief (+7%) bets in a single day. In comparison with per week in the past, merchants have added to each lengthy (+4%) and brief (+1%) publicity.
Beneficial by Margaret Yang, CFA
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— Written by Margaret Yang, Strategist for DailyFX.com
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