Spot gold took another heavy beating on Thursday, hitting an intraday low of $1,893.33 an ounce, briefly moving back below the $1,900 mark and down nearly $25 on the day on expectations of a U.S. fiscal stimulus bill. Still, the odds of a deal being passed before election day remain low, which in turn boosted the dollar and disappointed gold bulls. Markets are waiting for today’s US presidential debate, which is seen as Mr Trump’s last chance to claw back Mr Biden’s lead in the polls.
Note that house Speaker Nancy Pelosi was “pretty much” on the verge of a stimulus deal, but Forexlive later noted that she may have been referring to the health care part of the deal, not the whole stimulus deal. So overall, with less than two weeks to go until election day, it seems unlikely that a deal will be passed before then. This makes it difficult for gold to gain sufficient upside support in the short term.
The Senate Judiciary Committee, meanwhile, approved Mr. Trump’s nomination of Supreme Court Justice Charles Barrett, clearing the way for full Senate confirmation Next Monday. This is certainly good for the Trump side of the race. While the polls still favor Mr. Biden, the lessons of 2016 have discouraged investors from taking big steps until the dust settles.
On the economic front, a slew of key U.S. data points to a positive outlook. In particular, the number of Americans filing new claims for unemployment benefits reached its lowest level since the coVID-19 outbreak.
A total of 787,000 people filed initial jobless claims last week. That was the smallest increase since the U.S. economy began sliding in March. The total number of people claiming continuing jobless benefits fell to 8.373 million from 9.397 million a week earlier. This may be due to people returning to the job market. U.S. jobless claims fell for the third time in four weeks, a sign the labor market is still recovering but is still far from pre-pandemic health, the agency said in a commentary. The number of people filing new claims for unemployment benefits fell to 787,000 in the week ended Oct. 17, labor Department data showed Thursday. Excluding seasonal fluctuations, applications fell by about 73,000.
Separately, total sales of previously owned U.S. homes surged to their highest in more than 14 1/2 years in September, helped by historically low mortgage rates, but analysts said prices rose to record highs amid a shortage of existing homes, potentially curbing further gains in total sales.
The Conference Board said its leading index rose in September, driven by a drop in unemployment claims and a rise in housing permits. However, the slowdown in the pace of improvement suggests that the US economy may be losing momentum before it enters the final quarter of 2020.
On a technical note, the Bulls face strong resistance at $1924dSMR after a large downward wedge breakout was confirmed on Wednesday. Therefore, only continue to break through the above strong resistance level, long kinetic energy may regain kinetic energy. The next key resistance level is the October 12 high of $1,933.30, above which the psychological level of $1,950 will be tested. On the downside, the 21st moving average of $1,898 will continue to impede the downside, with a break below this level likely testing the 100 moving average of $1,879.
Stephen Innes, at AXI, said the US election and coVID-19 were having a double impact on the stock market. “With the outbreak once again taking root in everyone’s lives and the big macro events of the year just weeks away from a final decision, markets are likely to be more volatile and defensive.”
Chintan Karnani, the chief market analyst at Insignia Consultants, said hedge funds may choose to short the dollar if the market thinks the U.S. election will be close, which is positive for gold.