Gold continued to trade in a tight range above 1900, while silver hovered near $24.30 in intraday Asian trading on Wednesday amid risk sentiment and wait-and-see sentiment ahead of the U.S. election.
Asia Pacific stocks fell in early trading on Wednesday, while oil fell and gold traded in a tight range against the dollar as the number of coronavirus infections in the US continued to rise and the outlook for the stimulus package dimmed.
According to the statistics from Johns Hopkins University, as of the evening of 27th EASTERN Time in the United States, there were more than 8.77 million confirmed cases of coVID-19 and more than 226,000 deaths in the United States.
The situation is also not encouraging in Europe, where the number of new confirmed coVID-19 cases has hit a record high in a single day. Mike Ryan, executive director of the World Health Organisation’s (WHO) emergency health programme, said it was clear that Europe was at the centre of the second wave of outbreaks and that broader measures were needed to halt the spread of the disease.
Adding to investors’ gloom, the White House said an agreement on a coVID-19 rescue package could be reached “within weeks”, meaning a deal before the November 3 election is unlikely.
US President Donald Trump acknowledged on Tuesday that it may take until after the November 3 election to reach an agreement on the new coronave-aid package, blaming Pelosi, the Democratic Speaker of the House of Representatives, for the White House’s delay in reaching an agreement with Congress.
Policy factors seem to be playing a bigger role, said Eric Jussaume, head of fixed income at Cambridge Trust. “The market wants some sort of stimulus, and it hasn’t happened yet.”
“The pullback we’re seeing is more of a risk-off as expectations of additional stimulus have been set aside,” said Kevin Flanagan, head of fixed income strategy at WisdomTree Investments in Flanagan. “It’s leading to some disappointment.”
In addition, the US election is more uncertain. While Democrat Joe Biden has a clear lead over U.S. President Donald Trump, the race is tighter in the swing states that could determine the outcome of the election.
“The market moves and volatility will continue,” said Juan Perez, a currency trader at Tempus Inc. “The jitters and anxiety about the election will continue. “Over the next six or seven days you will see the dollar going up and down in a roller coaster ride.”
“Gold is stuck in a tight range and probably won’t do much until after the U.S. election,” said Michael Matousek, chief trader at U.S. Global Investors in New York. But he added that investors remained bullish on gold as concerns over coronavirus, the global economic slowdown and stimulus measures prompted investors to add more gold to their portfolios.
Daily chart, the DOLLAR index day to maintain a narrow range of shocks above the 93 mark, the trend in a wait-and-see state. The daily chart MACD green momentum column weakened slightly, while the KDJ random index held steady above the oversold level, indicating that short-term bearish momentum is weakening and prices may stabilize.
Looking at the 4-hour chart, the USD index formed an upward moving low after the previous high of 93.13 was broken, focusing on 100-period moving average resistance. A small expansion in the MACD red momentum column and a rebound in the KDJ random index above the 50 level indicate strengthening dollar bullish momentum, short term or further higher.
On the daily chart, gold continued its narrow swing, remaining between the 60-phase and 100-phase moving averages. As the two averages continue to narrow, gold’s breakout is getting closer. The daily chart MACD red momentum column remains weak, with the KDJ random index holding steady near the 50 level, indicating that gold bullish momentum is not strong and is currently prone to volatility.
On the 4-hour chart, gold has rallied from its recent low of $1891 and is trading above $1900. The MACD red kinetic energy column was basically stable, while the KDJ random index held steady below the overbought level, indicating that gold short term or continue to shake.
On the daily chart, silver extended its narrow trading range and was trading near 24.35. The daily MACD red column remains weak, with the KDJ random index falling below the 50 level, indicating that silver’s bullish momentum is still in short supply or further volatility.
In the 4-hour chart, silver has rebounded from a low of $24.07, with strong resistance above its 200-day moving average. The MACD green momentum column is very weak, with the KDJ random index trading around the 50 level, indicating a lack of momentum in silver, short term or further volatility.
Fundamentals positive factors:
- The situation between China and the United States is tense again. In the space of a week, The US Congress approved two arms sales to Taiwan. On October 21, the US announced the sale of $1.8 billion worth of equipment to Taiwan. On October 26, the US again announced the sale of 100 Harpoon coastal cruise missile systems to Taiwan for a total of $2.3 billion. — Risk aversion due to china-us tensions has supported gold prices.
- The outbreak showed signs of worsening in Europe and the US, with the US, Russia and France recording a record number of new cases in a single day. The number of corona-related hospitalizations in the US jumped to its highest level in two months. — A worsening epidemic will trigger risk aversion, which is good for gold.
- The number of confirmed coVID-19 cases in the United States continued to climb in the past two days, with 79,852 new cases reported on Saturday, edging closer to Friday’s record of 84,244, According to Reuters. — The rebound of the epidemic brings safety, which is good for gold.
Fundamentals negative factors:
- The White House press secretary on Tuesday played down the prospects for an agreement on a massive Covid-19 aid package before the November 3 U.S. presidential election, accusing House Speaker Nancy Pelosi of asking for too much. — The pre-election stimulus package is bearish for gold.
- Mitch McConnell, the Senate majority leader, has adjourned the Senate until November 9 as the chances of the White House and Democrats reaching an agreement on a new bail-out package before the election look slim. A stimulus package is almost impossible to come by before the election, which is bad for gold.
- House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin traded accusations Friday that they should help move the talks forward. The chances of passing a stimulus bill before the election are fading fast. Pelosi said Trump should push negotiations and get Republicans to agree to any deal with the White House on a nearly $2 trillion aid package. Mr. Mnuchin, the White House negotiator, said significant progress had been made, but accused Ms. Pelosi of stalling by refusing to compromise Democratic priorities. The stimulus bill has been slow to come to fruition.