Daily Brief, October 08 – Everything You Need to Know About Gold! 

Posted Thursday, October 8, 2020 by
Arslan Butt • 2 min read

Good morning fellas,

Prices for the precious metal, GOLD, closed at 1,887.36, after placing a high of 1,897.95, and a low of 1,872.88. Overall, the movement of the yellow metal remained bullish throughout the day. After declining by almost 2% in the previous session, gold prices rose, recovering 1% of the previous day’s losses on Wednesday, amid renewed fears over economic recovery and uncertainty related to the upcoming US Presidential election.

The long-term gold stance is still bullish, as the global low-interest-rate environment and the rising uncertainties related to the upcoming US elections remain on board. US President Donald Trump is receiving coronavirus treatment, but he has still managed to halt negotiations for an additional stimulus package until after the US Presidential elections.

This announcement lifted the US dollar prices on the board, and pushed  the yellow metal down, as it is widely used as a hedge against inflation and currency debasement. The Americans were far from pleased by Trump’s decision. Furthermore, if Mr. Trump wants Americans to vote for him in the upcoming elections, and put the Americans in a better position, he will have to submit to the Democrats.

Keeping the negative response from the Americans in view, and the the fact that he is losing his grip on the elections, he dispatched US Treasury Secretary Steven Mnuchin to revive talks with the House speaker Nancy Pelosi for a narrower, targeted deal that focuses especially on hep for airline workers.

After Trump refused to negotiate with the Democrats anymore until after the elections, the Democrats demanded a 2.4 trillion dollar stimulus against the Republican’s offer of 1.6 trillion dollars. After President Trump flip-flopped on the fiscal relief fund on Wednesday, gold prices started to gain, recovering the losses of the previous day.

Furthermore, the US Federal Reserve released the minutes of its September monetary policy meeting on Wednesday. The minutes revealed that most Fed bankers favored issuing a new coronavirus aid package, and they urged US Congress to deliver it, as the ongoing pandemic is likely to drag the economic recovery further.

The minutes showed that in the second quarter of 2020, the US economy had contracted at the fastest pace in history, by 31.4%, due to widespread lockdowns triggered by the coronavirus pandemic. On the labor side, more than 21 million jobs have been lost since the lockdowns began in March and April. However, the labor market recovered 2.5M jobs in May and 4.8M jobs in June.

The Fed minutes failed to provide any meaningful movement in GOLD prices on Wednesday. However, the latest US FDA guidelines said that the vaccines developed for the coronavirus would be delayed until after the US presidential election on November 03. This news also raised the safe-haven sentiment, boosting gold prices on Wednesday.

Daily Technical Levels

Support              Resistance

1,877.66               1,902.66

1,864.98              1,914.98

1,852.66              1,927.66

Pivot Point:       1,889.98

The technical side of GOLD has not changed much, as it fell sharply to trade at the 1,871 level but soon bounced off to rest at the 1,885 level. Gold has closed a series of Doji and Spinning top candles, over support levels of 1,874, suggesting an oversold gold situation, 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 1,874 support levels could trigger selling until the 1,864 level. Good luck!

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