Happy Friday traders,

Prices for the precious metal, gold, closed at 1,867.68, after placing a high of 1,884.93, and a low of 1,859.92. Prices for the precious metal fell to a one-month low on Thursday, on the back of a strong US dollar and lack of clarity over the US stimulus agreement, coupled with the continuous rise in the number of coronavirus cases. However, the uncertainty ahead of the US election kept the losses in gold limited.

The prices of gold moved back under the 1,900 level on Thursday, due to the recent rally in the US dollar. The comments from the Head of Congress and White House signaled a tough road ahead for a coronavirus stimulus package, even after the next week’s US election. In March, the US Congress released a Coronavirus Aid, Relief and Economic Security (CARES) stimulus worth about $ 3 trillion, as paycheck protection for workers, loans and allowances for businesses, and other personal aid for qualifying citizens and residents.

Since then, the Democrats and President Donald Trump’s Republican Party have been locked in a stalemate regarding a successive package to the original CARES stimulus measure. The differences have been over the size of the next relief bill, as thousands of Americans, especially the workers in the airline sector and the owners of small businesses and their employees, were at risk of losing their jobs without further aid.

Despite months of negotiations between the White House and Congress, the hopes for a new coronavirus stimulus agreement before the election have faded away over the past two weeks. The hopes shifted towards the fact that a deal might still be possible after the elections next week, regardless of who wins the election – Donald Trump or Joe Biden.

However, the Speaker of the House of Representatives, Nancy Pelosi, revealed that these hopes were not justified, as the Republicans were yet to answer her on funding for several critical areas. The uncertainty and lack of hopes that a stimulus package will be delivered, even after elections, raised the risk sentiment and weighed on the gold prices on Thursday.

On the data front, at 17:30 GMT, the Advanced GDP for the United States for the quarter rose to 33.1%, compared to the expected 32.0%, lending support to the US dollar. The Unemployment Claims for the previous week declined to 751K from the projected 773K, supporting the greenback. At 17:32 GMT, the Advance GDP Price Index figures for the quarter showed an increase to 3.6%, against the prediction of 2.9%, also supporting the US dollar. At 19:00 GMT, the Pending Home Sales figures for September were released, showing a decline to -2.2% from the projected 3.1%, which weighed on the US dollar.

Most of the US macroeconomic data remained supportive of the local currency, the US dollar, which ultimately weighed on the gold prices, dragging them down to the lowest level in one month on Thursday.

Meanwhile, the losses in gold were capped by the rapidly rising number of coronavirus infections in Europe, which have forced France and Germany to re-impose lockdown restrictions, which in turn has raised concerns over global economic recovery and pushed the risk sentiment on the market, ultimately putting pressure on the gold prices on Thursday.

Daily Technical Levels

Support              Resistance

1,861.34              1,904.84

1,843.47              1,930.47

1,817.84              1,948.34

Pivot Point:       1,886.97

The precious metal, gold, has violated the double top resistance level at 1,884, and the closing of the candle below this level may drive further downward movement in the market. On the lower side, gold may face the next support at 1,863, and even lower, the XAU/USD could also lead it’s price towards 1,848. Conversely, the bullish breakout at the 1,884 level could send the gold prices up higher, towards 1,899 and 1,905. Good luck!