Daily Brief, October 07 – Everything You Need to Know About Gold Today!
Arslan Butt • 3 min read
Good morning traders,
Prices for the precious metal, GOLD, closed at 1,877.78, after placing a high 1,921.09, and a low 1,874.56. Overall, the movement of gold remained bearish throughout the day. On Tuesday, gold prices fell sharply, on the back of a rising risk sentiment, supported by a range of different factors. Gold prices fell to a seven-day low on Tuesday, on the back of the latest call by US President Donald Trump to halt the negotiations for a coronavirus relief stimulus package and checks until after the US Presidential elections.
US President Donald Trump was hospitalized for three days, and less than a day after he was discharged from the hospital and returned to the White House, he unexpectedly put a hold on the next round of stimulus package talks till after the elections. This news raised the risk sentiment in the market, and negatively impacted the gold prices, which dropped to a seven-day low.
The gold prices also suffered, due to the latest news about coronavirus treatments. On Tuesday, Vir Biotechnology and GSK announced that their antibody drug against the coronavirus had entered the Phase 3 trials. Earlier results of the trials showed that the same antibody-drug might neutralize the virus and kill the infected cells. This news raised hopes for a possible coronavirus cure and provided strength to the risk sentiment, dragging the yellow metal prices down on Tuesday. Moreover, the continuous development in terms of vaccines and antibodies for the treatment of COVID-19, has supported the positive momentum in stocks, weighing on the gold prices.
Meanwhile, now that Trump has been discharged from the hospital, the chances of him participating in the next round of the debate with Joe Biden have increased. This supports the risk sentiment, ultimately weighing on the gold prices. The focus of the traders shifted back to the US Stimulus package, as the need for it to support the economy cannot be denied. However, Trump has ordered his administration and the Republican Party not to agree on the stimulus package, which has increased the fears that the economy might collapse. These concerns capped any further losses in the gold prices.
Furthermore, on Tuesday, the chairman of the Federal Reserve, Jerome Powell, urged Congress to deliver another round of pandemic relief aid. He said that doing too much was better than doing too little. However, just hours later, Trump dashed hopes for any quick deal between the Democrats and the Republicans.
On the data front, the Trade Balance from the US in August dropped to -67.1B against the predicted -66.2B, weighing on the US dollar. The JOLTS Job Openings remained flat at the expectations of 6.50M. The depressing US data weighed on the local currency, capping any further losses in the gold prices on Tuesday.
The rising geopolitical tensions between Azerbaijan and Armenia also helped cap further losses in gold prices on Tuesday. The two countries exchanged heavy rocket and artillery fire last week, and regular explosions were also reported in Armenia’s capital city. The parties accused each other of targeting civilian areas over the disputed ethnic Armenian region, as the conflict escalated during the week. These tensions raised the safe-haven appeal and helped gold to limit its losses.
Daily Technical Levels
Pivot Point: 1,904.67
Gold fell sharply, to trade at the 1,874 level, as it failed to close above the 1,917 resistance level. Gold has closed a Doji candle over 1,874 support levels, suggesting an oversold situation for the precious metal, and it may bounce off over the 1,874 level, until the 23.6% Fibo level of 1,886 and the 38.2% Fibo level of 1,892. Further selling could be seen below the 1,892 level, and a bearish breakout at the 1,874 support level could trigger selling until the 1,864 level. Good luck!