Daily Brief, October 14 – Everything You Need to Know About Gold Today!
Gold prices closed at 1,894.14, after placing a high of 1,925.36, and a low of 1,886.36. Overall, the movement of gold remained bearish throughout the day. The precious metal fell by 1.9% on Tuesday, to below the 1,900 level, due to the strength of the US dollar, as a result of an impasse over the US stimulus package. Another reason behind the decline in gold prices is the International Monetary Fund’s latest global recession projection for 2020.
On Tuesday, IMF chief economist Gita Gopinath said that the coronavirus pandemic had shut down business and industry worldwide. The IMF also projected a 4.4% contraction in global economies in 2020, due to the coronavirus pandemic. However, the deep global recession projected by the IMF was less than the previous projection of 5.2%. The decrease in the global recession projection indicated that economies were improving, and as a result, the risk sentiment took over, weighing on the prices for the yellow metal.
On the other hand, the US dollar index jumped by 0.5% on Tuesday, against its rival currencies, putting more pressure on the gold prices, after US House Speaker Nancy Pelosi said that the latest coronavirus stimulus package offered by US President Donald Trump fell short of the needs of Americans. It looks like it is going to be tough to deliver the US stimulus package, due to disagreement between the Republicans and the Democrats. This impasse over the next round of the US stimulus package, to help Americans through the pandemic, has weighed on gold prices, dragging them below the 1,900 level.
However, analysts believe that the outlook for gold is still bullish because, sooner or later, the stimulus will be delivered, perhaps only early next year, and that will lead to higher gold prices. On the data front, at 15:00 GMT, the NFIB Small Business Index figures showed an increase to 104.0 points, from the expected 100.9, lending support to the US dollar and weighing on the gold prices. At 17:30 GMT, the Consumer Price Index for September was released, indicating that it came in line with the expectations of 0.2%. The CPI also remained flat, corresponding to the forecast of 0.2%.
Furthermore, the strength of the US dollar was supported by the decline in the Euro, due to the deterioration of the coronavirus situation in Europe. The number of coronavirus cases has risen dramatically in Europe, and this has raised concerns for the economic recovery of the Eurozone, which has weighed on the Euro. The US dollar is the Euro’s biggest rival, and the decline in the Euro caused a significant rise in the US dollar, ultimately weighing on gold prices on Tuesday.
Support Resistance
1,922.00 1,937.60
1,915.10 1,946.30
1,906.40 1,953.20
Pivot Point: 1,930.70The precious metal, gold, is trading with a bullish bias, over the 1,881 level, which is the triple bottom level on a 2-hour timeframe. A bullish trend may lead to an increase in gold prices until 1,901 and 1,908, which marks a 38.2% and 50% Fibonacci retracement level. Simultaneously, the MACD and RSI suggest a selling bias; therefore, we may see selling in gold below the 1,901 and 1,907 levels today, until the support areas of 1,887 and 1,880. Good luck!
Top 4 Brokers
