On Monday, spot gold accelerated its short-term gains, breaking through the $1,950 / oz barrier and now trading at $191.29 / oz. Silver, meanwhile, rose to $26.86 and continued to hover around its 200-day moving average this week after failing to break above it last week.
The dollar posted its second straight week of gains last week as U.S. stocks tumbled and oil prices tumbled. Gold broke a key support of $1,920 during European trading last Tuesday, hitting a weekly low of $1,906.33. Over the next two days, it moved up the channel, hitting a one-week high of $1966.29 on Thursday before retreating to around $1940 on Friday to close at $1939.40, within a trading range of just $60, and gradually narrowing in the last four weeks.
This week, the markets will have a super week – The Fed’s decision, Powell’s press conference; Economic reports, such as U.S. retail sales, have the potential to weigh heavily on market movements. Coupled with the dramatic deterioration of the global COVID-19 epidemic, especially as Europe appears to be collapsing again, the development of coVID-19 vaccine has suffered setbacks. Brexit worries rise… These are all supporting factors for gold’s rise.
Investors are keeping a close eye on the Fed’s policy meeting this week, which is also the last before the November election. Markets are now expecting the Fed to make small changes to its statement, clarify how it will use its guidance, update its outlook for the economy and interest rates and add its economic forecast for 2023 for the first time. Some investors worry that the market could continue to gyrate sharply if the Fed fails to meet demand.
Marc Chandler, chief market strategist at Bannockburn Global Forex in Bannockburn, New York, said the Fed’s rhetoric for the meeting will be very dovish, but Powell is unlikely to take a position on bond-buying targets or yield curve control. The Fed’s bigger worry than inflation is the downside risk to the economy. U.S. stocks are likely to remain volatile but not sharply lower in the coming week. After all, if the Fed is dovish, the dollar could fall, but that would be good for equities.
Analysts and traders are uniformly bullish on gold’s outlook for the week, according to the FX168 weekly Financial Market Survey released on Saturday (September 12). Among traders and analysts surveyed weekly by financial markets, 80 per cent were bullish on gold and 20 per cent were consolidation.
The gold 1-hour chart shows the price testing of a rally supported near the triangle’s lower track 1937, with key resistance above the 50% Fibonacci retracement of 1949, the front height and the resonance resistance formed by the triangle’s upper track, and above the resistance at the 61.8% Fibonacci retracement of 1959. If prices go down, support see 1937. Short – term still bullish, focus on 1949 levels.
The gold daily line, which shows prices in a consolidation trend of highs down and lows up, is currently testing resistance to a downtrend line that has fallen since early August. If it breaks, see Fibonacci’s 23.6 percent correction to 1979. If the price is blocked to fall, the continuation of the consolidation trend, support to see Fibonacci 38.2% back to 1920. Also bullish daily line, pay attention to downtrend line.
While normal relative strength indicators suggest further consolidation, a move below the key SMA while remaining above the uptrend since August 12 would favor the bulls.
However, bulls must break through $27.20 / oz and above resistance levels before they get involved. Also note that the $27.08 / oz 100-day SMA will act as resistance. Meanwhile, over the past 200 days, the SMA has shown a significant downward trend and is currently at $26.78 / oz. Prices may take a break from the monthly support level, currently around $26.30/25.
A monthly low of $25.84 an ounce will be key if bears get close to $26.25 an ounce, and a break below that level could lead to a repeat of last month’s low of $23.45 an ounce.
Fundamentals positive factors:
- The Fed’s decision on interest rates may set off a gold rally. If the Fed opts for more stimulus, gold appears poised to return to the record high it reached on Aug. 7. In the medium to long term, gold will also continue to grow. Last week, Standard Chartered raised the average gold price for 2020 to $1,805 and 2021 to $2,125, up from $1,749 and $1909, respectively.
- The latest news from the border conflict between China and India. The Indian Express reported on the 12 September that the IAF was planning to set up anti-aircraft radars in three border areas in Uttarakhand, including Chamoli, Pithoragarh and Uttarkashi. Iaf has also proposed the development of a new pre-landing site in Uttarakhand to carry out its activities in the mountains of Uttarakhand. The Indian state of Uttarakhand is located in northern India, near the Tibetan region of China.
- On the china-us situation, Chinese Foreign Ministry Spokesman Zhao Lijian said, “As the Chinese side pointed out on September 3, since Last October, the US State Department has imposed restrictions on Chinese embassies and consulates in the US and their personnel to perform their normal duties in the US many times. “What the US did seriously violates international law and basic norms governing international relations, and seriously interferes with China-Us relations and normal bilateral exchanges.”
- According to a new Report in the New York Times, Bytedance turned down Microsoft’s offer to buy TikTok, leaving Oracle as the sole bidder. Microsoft also issued a statement confirming the news. While Bytedance has previously referred to Oracle as its “technology partner,” China will not necessarily agree to the sale.
- A record high number of cases were confirmed worldwide in a single day. The WORLD Health Organization reported on Sunday that the number of coronavirus cases worldwide rose by a record amount in a single day, with a total of 307,930 cases added in 24 hours. The biggest increases were in India, the US and Brazil. India has reported 94,372 new cases, followed by the United States with 45,523 and Brazil with 43,718. The death toll rose by 5,537, bringing the total to 917,417. India now reports the most new cases daily in the world and last week set a global record of 97,570 in a single day, according to Reuters. In the U.S., new cases are falling, down about 44% from a peak of more than 77,000 reported on July 16. Cases in Brazil are also on the decline.
Fundamentals negative factors:
As for the coVID-19 vaccine, a joint venture between Oxford University and AstraZeneca PLC has won approval from the U.K.’s safety regulator to resume clinical trials, a company spokesman said Saturday. Albert Bourla, Pfizer’s chief executive, said On Sunday that his company’s coronavirus vaccine could be distributed to Americans by the end of the year if it proved to be safe and effective.