|

Gold Price Analysis: XAU/USD bears just can't catch a break

  • Gold prices are stubbornly bid within a bearish environment.
  • Uncertainty and volatility keeping the yellow metal coiled in a familiar range.

The price of the yellow metal has so far been held up sideways in a $1,897.91-$1,911.35 range on Tuesday, currently bid up some 0.32%.

The price had been slowly chipping away to the downside below resistance and within a bearish environment on the weekly chart.

However, the price is caught up in fundamentals which are making for s gruelling swing trade for the bears, positioned for a downside continuation. 

Gold could be in what is now a wait-and-see mode ahead of US elections on the 3rd of November.

Markets are evaluating the potential for a fiscal stimulus deal to be struck in the lame-duck session which hinges on the election results. 

A Biden victory ( Blue wave) could keep gold bid

''Certainly, a Blue Wave has driven expectations of a lower dollar, as more stimulus fuels a global reflationary wave, but it has also fueled the bear steepening in the Treasury curve,'' analysts at TD Securities argued.

''While we think the Fed will mitigate these risks shortly after the election by extending the duration of QE, the Fed is taking a reactive approach — which suggests that rates may need to rise to prompt them to act.''

Overall, a Biden landslide is expected to weigh on the greenback that has so far enjoyed bouts of demand on risk-off flows. A weaker dollar should amount to higher gold prices.

However, under a split government scenario, achieving consensus on a large package and details regarding state aid could be tough. 

This should bull flatten the yield curve, providing another risk mitigant in this scenario, the analysts at TD Securities have argued, adding:

''In the medium-term, the balance of risks remain firmly tiled to the upside for gold bugs, as traders may not need to look too far in order to discount these risk mitigants. For the moment, the waning upside momentum has raised the bar for CTAs to add to their longs in the yellow metal.''

Gold technical analysis

XAU/USD

Overview
Today last price1906.64
Today Daily Change4.59
Today Daily Change %0.24
Today daily open1902.05
 
Trends
Daily SMA201902.86
Daily SMA501921.41
Daily SMA1001883.41
Daily SMA2001763.61
 
Levels
Previous Daily High1908.66
Previous Daily Low1891.32
Previous Weekly High1931.54
Previous Weekly Low1894.48
Previous Monthly High1992.42
Previous Monthly Low1848.82
Daily Fibonacci 38.2%1902.04
Daily Fibonacci 61.8%1897.94
Daily Pivot Point S11892.69
Daily Pivot Point S21883.34
Daily Pivot Point S31875.35
Daily Pivot Point R11910.03
Daily Pivot Point R21918.02
Daily Pivot Point R31927.37

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

GBP/USD revisits 1.3530; Dollar pushes harder

GBP/USD adds to the weekly correction and recedes toward the 1.3530 zone on Friday. Indeed, Cable faces increasing selling pressure on the back of extra gains in the Greenback, particularly fuelled by Chair Warsh’s speech at the Jackson Hole Symposium and the US NFP Annual Revision (-79K).

EUR/USD breaches below 1.1600, multi-day lows

EUR/USD now accelerates its decline and retreats to seven-day troughs in the sub-1.1600 region at the end of the week. The pair’s pullback comes on the back of the strong rebound in the US Dollar after Chair Warsh delivered a hawkish message in Jackson Hole, while the US NFP Annual Revision came in at -79K.

Gold seems vulnerable above $4,450 as Fed hike bets, Iran risks support USD

Gold recovers slightly from a one-and-a-half-week low, touched during the Asian session on Monday, though any meaningful recovery seems elusive. Fed Chair Kevin Warsh’s Jackson Hole speech was perceived as hawkish, raising expectations for a September rate hike. Adding to this, fresh US strikes on Iran keep the geopolitical risk premium in play, which acts as a tailwind for the safe-haven US Dollar and should cap the bullion.

Week ahead: RBNZ and BoC decide on rates ahead of all-important US NFP
The US dollar staged a modest recovery this week, perhaps as traders decided to cover some of their short positions amid slightly stickier or in-line US PCE inflation numbers for July, confounding expectations of softer prints amid the softness revealed in the CPI data for the month.
CFTC Report: CAD short covering leads; Gold buying surges
The week in one sentence: speculative positioning shifted more constructively in the week to August 25. CAD short covering led the move, followed by a broad reduction in EUR shorts and renewed Gold buying. GBP and VIX positioning also improved, while JPY positioning deteriorated and WTI flows diverged from weaker prices.
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.