Good morning traders,

GOLD prices rebounded from the previous session’s sharp decline, gaining 1% on Wednesday, on the back of the weakened dollar and increased uncertainties surrounding the US election and global economic recovery. Another reason behind the recent surge in gold prices was the faded hopes that Congress would pass the latest US coronavirus stimulus measures before the presidential election on November 3, and renewed disappointment regarding the launch of a COVID-19 treatment.

House of Representatives speaker Nancy Pelosi dashed the hopes for the next round of US stimulus before the election, stating that the proposed $ 1.8 trillion package was not enough to support the economy through the pandemic and the deep recession. A day later, Johnson & Johnson suspended clinical trials for its coronavirus vaccine, due to an unexpected illness in one of the participants; on Tuesday, Eli Lilly and Co. also paused the government-sponsored clinical trials of its coronavirus antibody treatment.

These halted clinical trials decreased the investor’s risk appetite and diminished the hopes that a coronavirus treatment would be released soon. Gold prices gained traction after the risk sentiment soared in the market on Wednesday. This week, the IMF and the World Bank started their annual meetings, which will extend from October 12 to 18. Global finance leaders warned that failure to stop the spread of the coronavirus and maintain stimulus, together with mounting debts in developing nations, would crush the fragile global recovery.

COVID-19 has driven a rise in poverty for the first time in 2 decades, and the 2020 World Bank Group-IMF Annual Meetings will focus on this aspect. The pandemic has hit the poor hardest, and the rising debt burdens in developing nations could hurt their ability to recover. The meetings started with discussions on the action needed to build a strong foundation for a resilient recovery that would lift all countries and all people.

Meanwhile, on Wednesday, US Treasury Secretary Steven Mnuchin urged both global institutions to work judiciously within their existing resources, to fight the coronavirus pandemic. Mnuchin also urged G20 nations to endorse a proposed debt-restructuring framework.

The developments made in the annual meeting of the IMF and the World Bank raised hopes that developing nations will be given help, in order to aid their recovery from the pandemic, and this raised the risk sentiment in the market, limiting additional gains in gold prices on Wednesday.

Furthermore, Federal Reserve Vice Chairman Richard Clarida said that the US economic data since May has been surprisingly strong, though it will still take another year for output to reach to pre-pandemic levels once again. On the data front, the Core PPI for September was released at 17:30 GMT, showing a rise of 0.4% against the expected 0.2%, and lending support to the US dollar. In September, the PPI also rose, reaching 0.4% against the projected 0.2%, also boosting the US dollar. The robust macroeconomic data from the US weighed on gold gains on Wednesday and kept the bullish trend of gold under pressure.

Daily Technical Levels

Support              Resistance

1,889.04              1,921.54

1,870.77               1,935.77

1,856.54              1,954.04

Pivot Ppoint:      1,903.27

The precious metal, GOLD, is trading with a bullish bias over the 1,900 level, with the triple bottom level support at 1,891 on the 2-hour timeframe. A bullish trend could lead to a higher gold price, until 1,912 and 1,919. Simultaneously, the MACD and RSI suggest a bullish bias; therefore, we may see buying in gold above levels of 1,891 today, until the resistance area of 1,921. Good luck!