摘要:Gold prices dipped at the end of last week, cementing its first weekly decline in over half a month after odds diminished for a new fiscal stimulus deal in the US before the November 3rd presidential election.
Gold prices dipped at the end of last week, cementing its first weekly decline in over half a month after odds diminished for a new fiscal stimulus deal in the US before the November 3rd presidential election. The yellow metal was benefitting from a lower US dollar during the week as inflation expectations continued to underpin gold prices.
Price action on Friday points to the fact that gold will continue to react strongly to movements in the greenback in the coming sessions. Though an agreement over fiscal stimulus will likely not be found in the near future, traders with a longer investment horizon see a well-supported asset.
For the time being, without any short-term catalyst like a stimulus package, the upside potential on gold remains limited. Prices could continue to drift sideways with a bearish bias under the current configuration.
Economic data released at the end of last week showed strong retail sales in the US. The September month over month figure came in at 1.9 percent versus expectations of 0.7, lifting market risk sentiment and weighing on gold prices.
From a technical perspective, the main trend in gold is up on the daily chart. Prices closed below the psychological 1,900 marks through the 20 EMA hasnt been tested yet. A potential trade for next week will be a push towards the 1,890 level, with price action in the run-up likely to determine whether gold is in store for a further move towards the 0.382 Fib retracement level at 1,877.70.
(Chart Source: Tradingview 18.10.2020)
On the upside, gold will have to find its way back above the 1,915 pivotal points in order to entice further buying demand from other market participants. Buying on pullbacks for 10$ price increment targets would be a sound strategy in these rangy conditions. In the longer term, we would expect additional bullish momentum as fiscal stimulus packages are reached after the US elections.
Support & Resistance Levels:
R3 1,962.27
R2 1,943.39
R1 1,915.53
S1 1,895.00
S2 1,877.70
S3 1,853.96
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