Gold on Tuesday (November 17) traded in a tight range, hitting a high of $1,893.36 an ounce before returning to near parity, demonstrating that multiple factors in the market are offsetting each other, making it difficult for gold to gain enough momentum for both short and long positions. The weaker-than-expected U.S. “terror data” in October boosted safe-haven demand, but that was already priced in and the focus was already on a post-vaccine economic recovery, so safe-haven buying was not enough to propel gold to a break. And for now, the gold market seems to be focused on fiscal stimulus, which both bulls and bulls will need to wait for to gain enough momentum to help gold gain momentum.
U.S. retail sales for October fell short of expectations. After an unexpected surge in September retail sales, analysts expected growth to slow significantly in October, but the actual figure was worse, with overall retail sales up just 0.3 per cent month-on-month, missing expectations of a 0.5 per cent rise and revised to 1.6 per cent from 1.9 per cent the previous month. Chad Moutray, of the National Association of Manufacturers in the US, said retail spending picked up after blockades in March and April, but the pace of increase has since slowed and disappeared in October. Meanwhile, CNN Business’s Paul La Monica also stressed that the lack of support for stimulus policies is hurting the U.S. economy.
An important problem for gold bulls now is that the 1900 mark has not been overcome after many shocks. On the one hand, investors continue to worry about the impact of the emerging COVID-19 epidemic and the new blockade on the global economy. On the other hand, the rosy outlook for vaccines means there is no need for fiscal and monetary stimulus on such a large scale. All factors pull the trend of gold into doubt. For gold, rising risks, continued stimulus and a falling dollar are all bullish factors; The advent of a vaccine, in turn, would reverse those factors that have continued to boost gold this year.
Technically, gold’s initial upside target remains in the $1,905.00 to $1,907.00 area, where the 50 – and 100-day averages are, and then $1,935.00 / oz. Today’s uptrend line support is $1866.50, looking further into the $1850.00 area. If it loses $18,50.00, the target is a large pullback to its 200-day moving average of $17,89.00.
One warning for the bullish outlook is that gold has not yet decoupled from the aggressive stock market sell-off, MarketPulse said. It is hard to say gold has hit a low until it survives a shock like Mr Trump’s Tweet that has pummels stocks.
In addition, as of November 16, there were 2,067.017 tonnes of gold held in the world’s eight largest gold ETFs, down 0.53 tonnes from the previous trading day, according to data from gold information website www.24K99.com, which monitors the world’s eight major gold ETFs.
“Once pessimism about the containment strategy turned into boundless optimism that there was a path to recovery and there were multiple potential vaccine candidates, so the change in outlook and tone was remarkable,” said Michael Hewson of CMC.
Edward Moya, senior market analyst at OANDA, said: “There is a lack of confidence in safe-haven flows and our optimism about the vaccine is in place, but the US and Europe are still struggling with the epidemic. Longer-term trends continue to support higher gold prices, but we have seen some investors abandon long bets. For many people, the vaccine news makes holding gold less attractive in the long run.”