Gold: Overview
EXPECTED MORE US STIMULUS TO DEVALUE THE US DOLLAR, POSITIVELY SUPPORT GOLD: The Trump
administration created the Lost Wages Assistance program in early August after a $600 weekly boost in
unemployment benefits lapsed in July. The new program, which offered $300 a week for up to six weeks, is nearing
its end in many states. The latest development requires more action on the part of the Democrats and Republicans,
which could increase chances for them to agree on a new stimulus package before the Presidential Election
(November 3, 2020). Talks between the Democrats and the White House are expected to continue and the number
they assumed to be negotiation is 1.9 trillion dollars.
US FEDERAL RESERVE EXPECTED TO KEEP INTEREST RATES NEAR 0.00% FOR A LONGER TIME- PERIOD: Federal
Reserve Chair Jerome Powell unveiled a new approach to setting U.S. monetary policy, letting inflation and
employment run higher in a shift that will likely keep interest rates low for years to come. Following a more than
yearlong review, Powell said Thursday that the Fed will seek inflation that averages 2% over time.
SAFE- HEAVEN DEMAND FOR GOLD DUE TO COVID-19 TRIGGERED FINANCIAL CRISIS: Gold could be expected to
continue recovering as demand for safe-haven assets remains high, supported by rising financial market
uncertainties due to the growing number of coronavirus cases worldwide. Many markets participants fear possible
implementations of partial lockdown measures across many countries, which in turn could hamper the ongoing
global economic recovery.
ANALYSTS OPINION (CITIGROUP and UBS): CITIGROUP said Gold could hit a record before the year-end, aided in
part by the risks surrounding the U.S. presidential election, according to Citigroup Inc. "Maintain our 0-3 month
point-price target at $2,200/oz and a 6-12 month target at $2,400/oz". UBS has raised its forecast for gold next
year from $1,850 to $2,100 per ounce.
Mid-Term Technical Outlook
Gold has continued to recover after losing around 100 dollars in September when it tested levels below the mark
of 1850.
From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index has recently
fallen below the oversold threshold of 30.
Gold has also managed to stay above its 155 Day Exponential Moving average which has been lately acting as the
support level.
Gold has also managed to stay above its former uptrend upper boundary, suggesting that it will try to preserve its
recent mid-term uptrend. In addition, Gold also tried to break out through the mi-term downtrend line, which
could be another bullish signal
On the upside, Gold could be expected to target Resistance 1 of 1950 and Resistance 2 of 2000 in extension. If,
however, Gold fails to live up to the above-mentioned technical outlook, it could target Support 1 of 1850 to the
downside.
EXPECTED MORE US STIMULUS TO DEVALUE THE US DOLLAR, POSITIVELY SUPPORT GOLD: The Trump
administration created the Lost Wages Assistance program in early August after a $600 weekly boost in
unemployment benefits lapsed in July. The new program, which offered $300 a week for up to six weeks, is nearing
its end in many states. The latest development requires more action on the part of the Democrats and Republicans,
which could increase chances for them to agree on a new stimulus package before the Presidential Election
(November 3, 2020). Talks between the Democrats and the White House are expected to continue and the number
they assumed to be negotiation is 1.9 trillion dollars.
US FEDERAL RESERVE EXPECTED TO KEEP INTEREST RATES NEAR 0.00% FOR A LONGER TIME- PERIOD: Federal
Reserve Chair Jerome Powell unveiled a new approach to setting U.S. monetary policy, letting inflation and
employment run higher in a shift that will likely keep interest rates low for years to come. Following a more than
yearlong review, Powell said Thursday that the Fed will seek inflation that averages 2% over time.
SAFE- HEAVEN DEMAND FOR GOLD DUE TO COVID-19 TRIGGERED FINANCIAL CRISIS: Gold could be expected to
continue recovering as demand for safe-haven assets remains high, supported by rising financial market
uncertainties due to the growing number of coronavirus cases worldwide. Many markets participants fear possible
implementations of partial lockdown measures across many countries, which in turn could hamper the ongoing
global economic recovery.
ANALYSTS OPINION (CITIGROUP and UBS): CITIGROUP said Gold could hit a record before the year-end, aided in
part by the risks surrounding the U.S. presidential election, according to Citigroup Inc. "Maintain our 0-3 month
point-price target at $2,200/oz and a 6-12 month target at $2,400/oz". UBS has raised its forecast for gold next
year from $1,850 to $2,100 per ounce.
Mid-Term Technical Outlook
Gold has continued to recover after losing around 100 dollars in September when it tested levels below the mark
of 1850.
From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index has recently
fallen below the oversold threshold of 30.
Gold has also managed to stay above its 155 Day Exponential Moving average which has been lately acting as the
support level.
Gold has also managed to stay above its former uptrend upper boundary, suggesting that it will try to preserve its
recent mid-term uptrend. In addition, Gold also tried to break out through the mi-term downtrend line, which
could be another bullish signal
On the upside, Gold could be expected to target Resistance 1 of 1950 and Resistance 2 of 2000 in extension. If,
however, Gold fails to live up to the above-mentioned technical outlook, it could target Support 1 of 1850 to the
downside.
Trade closed: target reached:
Target 1 closed in profit