News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Heads Up:💶 Deposit Facility Rate due at 11:45 GMT (15min) Expected: -0.5% Previous: -0.5% https://www.dailyfx.com/economic-calendar#2021-10-28
  • Heads Up:💶 Marginal Lending Rate due at 11:45 GMT (15min) Previous: 0.25% https://www.dailyfx.com/economic-calendar#2021-10-28
  • Heads Up:💶 ECB Interest Rate Decision due at 11:45 GMT (15min) Expected: 0% Previous: 0.0% https://www.dailyfx.com/economic-calendar#2021-10-28
  • 🇪🇸 Business Confidence (OCT) Actual: 4.4 Previous: 2.2 https://www.dailyfx.com/economic-calendar#2021-10-28
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.15%, while traders in AUD/JPY are at opposite extremes with 73.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/XYtMjCuS5v
  • Heads Up:🇪🇸 Business Confidence (OCT) due at 11:00 GMT (15min) Previous: 2.1 https://www.dailyfx.com/economic-calendar#2021-10-28
  • Join @CVecchioFX at 7:30 EST/11:30 GMT for his central bank monthly webinar. Register here: https://t.co/xRVdZJNZom https://t.co/FtpoHXt9D5
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Gold: 0.06% Silver: -0.07% Oil - US Crude: -1.68% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/w4aqPBlXTT
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.15% 🇬🇧GBP: 0.06% 🇳🇿NZD: 0.04% 🇨🇦CAD: -0.05% 🇪🇺EUR: -0.07% 🇦🇺AUD: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/NjljsK8zWb
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: France 40: 0.36% US 500: 0.18% Wall Street: 0.09% Germany 30: -0.03% FTSE 100: -0.18% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/YjP9iuzd4y
Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

Margaret Yang, CFA, Strategist

GOLD PRICE OUTLOOK:

  • Gold prices ranged above a key support level at US$ 1,900 amid souring sentiment
  • The US election may serve as a catalyst for gold trading next week
  • 79% of the retail gold traders (within IG)are in long positions, slightly higher than a week before
Advertisement

Gold prices consolidated at above US$ 1,900 this week amid souring market sentiment due to a resurgence in coronavirus cases around the globe. The absence of geopolitical catalysts and a relatively muted US Dollar index have led gold prices to consolidate within a tight range between US$ 1,900 – 1,910. Some traders may prefer to sit on the sidelines until the political skies are cleared after the US election, which is only one week from now.

Although Democratic presidential candidate Joe Biden appears to have a comfortable lead in national polls, the potential tail risk of a Trump-win scenario can’t be neglected. This renders the risk-averse US Dollar susceptible to a strong haven bid should the election outcome derails from the poll forecasts. A strengthening US Dollar is likely to weigh on precious metal prices, especially when ‘risk off’ sentiment is prevailing.

The medium-term outlook, however, appeared biased towards the upside as the Fed continued to expand its balance sheet, albeit at a much slower pace compared to earlier this year (chart below). The Federal Reserve balance sheet hit an all-time high of 7.177 trillion in October, surpassing the previous record seen in early June. Ample liquidity and ultra-low interest rates may buoy the medium-term outlook for precious metal prices, albeit short-term pressure remains.

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

Source: Bloomberg, DailyFX

Technically, gold prices came off the all-time high (US$ 2,075) in early August and have since entered a three-month consolidation. Prices attempted to stabilize since end September after finding a strong support at US$ 1,870 (the 76.4% Fibonacci retracement).

Gold prices have also formed a few bearish harmonic pullbacks (highlighted in black straight lines) before entering into an “Ascending Channel” in October. Immediate support levels can be found at US$ 1,900 (50-Day SMA), followed by US$ 1,883 (lower Bollinger Band). A narrowing Bollinger Band width suggests that tight range-trading may continue.

Gold PriceDaily Chart

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

IG Client Sentiment indicates that retail gold traders are heavily leaning towards the long side, with 79% of positions net long, while 21% are net short (chart below). As gold prices consolidate, retail traders have trimmed long (-1%) positions and added short (+7%) bets overnight. Compared to a week ago, traders have added to both long (+4%) and short (+1%) exposure.

Gold Price Coils Up in Tight Range. Will US Election Trigger Breakout?

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES