In early Asian trading on Monday, spot gold remained in a range and was just a step away from the $1,900 an ounce barrier. Financial markets were jittery last week as the U.S. election approached. Investors for the us election results are still uneasy, at the same time, the outbreak continued to spread to the prospects for economic recovery on haze, and America’s new round of stimulus bill negotiation and capricious, opened last week at $1903.41 an ounce, gold closed at $1899.91 an ounce, the highest hit $1931.38 an ounce, minimum hit $1893.33 an ounce, vibration amplitude of $30. While the dollar’s decline and the prospect of the U.S. government pumping money into the economy have been positive for gold, conflicting news has left the metal reeling without tangible direction.
This week will be the last before the US election, and the outlook for the result may become clearer, while investors need to be wary of the peak of the October surprise. On the other hand, the possibility of a new U.S. stimulus bill being agreed before the election could be revealed this week, which is sure to give markets fresh momentum. In this case, the major asset classes are set to continue to fluctuate. The Bank of Canada, The Bank of Japan and the European Central Bank will also announce interest rate decisions this week. In addition, the market’s focus this week remains some uncertainty about the economic and trade negotiations between the UK and The EU, the US bipartisan stimulus package negotiations and the us election.
In terms of economic data, investors will need to focus on global GDP figures for a further glimpse into the recovery.
It is worth mentioning that will be published on Thursday the United States in the third quarter real GDP annual season rate of initial value, the market is expected to recorded growth of 32.00%, and the data is in the second quarter by 31.40%, this is before hand over the last trump a “report card”, the United States in the third quarter real GDP can successfully achieve “v-shaped” rebound is important for his re-election chances, gold may also occur, then need to pay close attention to.
Since gold has been highly dependent on the dollar, the greenback’s movements depend on whether stimulus measures are introduced. But with just nine days to go before the us election, it is hard to see any real progress in the talks, which both sides see as political leverage. Most analysts don’t think a stimulus bill is likely until after the election.
This is stimulus bill negotiations last Tuesday deadline, but the very “efficient” talking just said, “gap is narrowing,” although the trump expressed a willingness to accept a greater amount of aid package, but the us house speaker Nancy pelosi and us Treasury secretary, Mr Qin on Friday accused each other should be efforts to promote negotiations 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.
Peter Hug, head of global trading at Kitco Metals, said: “There is one catalyst that could push gold higher ahead of the election and that is some kind of stimulus package. With each passing day, that becomes less and less likely. But the market is still waiting.” Hug points out that if there is stimulus between now and the weekend, gold could break above $1,925. On the downside, support is still at $1,875, then $1,850. “Unless there is a big sell-off, gold is not going to fall below that level.” On the other hand, without additional stimulus before the election, any financial aid could be delayed until January or February. “If Democratic presidential candidate Joe Biden wins, the stimulus package could be delayed until January or February, when Biden will take office,” Hug said.
The last US presidential debate, held at 9am Beijing time on Friday, also caught the market’s attention, with Trump and Biden arguing over issues such as the epidemic and international relations.
“Trump is much more civilised this time and Biden is showing leadership skills,” said Yasuaki Yamamoto, chief currency strategist at Mizuho Securities. But they basically didn’t come up with any new ideas, and the debate went back to normal, with no points added or lost.” Yamamoto doesn’t think the debate will change Trump’s chances. “The futures and the market reaction shows that Biden is ahead of the rally in favor of risk aversion, but I don’t think this debate is going to have a major impact because a lot of people have already voted,” he said. And that’s why the reaction after this debate has been muted.”
More than 50 million Americans have voted so far. Markets have been betting that whoever ends up in the White House will be good for gold because of the inevitability of more fiscal stimulus, a low interest rate environment and a weaker dollar. However, they point out that a blue wave sweep could trigger a bigger price rebound.
- With gold prices continuing to consolidate around $1,900 in the near term, investors shouldn’t expect a quick rally in the gold market, according to a Weekly gold survey released Friday by Kitco News. The gold market is still struggling to find direction, as the sentiment among market analysts is clearly mixed; Retail investors, meanwhile, remain extremely bullish on gold this week; However, investor interest in the market remains at levels not seen since the start of the year. Last week, 17 analysts responded to the survey. A total of seven analysts, each 41 percent, expect gold to rise or trade sideways this week; Meanwhile, three analysts (18 percent) expect gold prices to fall. Participation in Kitco News’ weekly online survey remains relatively low, at its lowest level since the beginning of the year. In the week ending October 18, 1,305 votes were cast. Of those, 800 (61%) said they were bullish on gold’s performance this week. Another 255 (20 percent) were bearish, while 220 (20 percent) were neutral.
- Adrian Day, President and CEO of Adrian Asset Management, described price movements and sentiment in the gold market as two steps forward and one step back. He added that the volatility would continue until after the November 3 U.S. elections. “Some investors have cashed out before the election, while others are disappointed that gold has lost momentum,” he said. On the other hand, investors are taking advantage of lower prices and taking advantage of possible long-term trends.” “A big victory for either party in the presidency and the Senate would be very good for gold,” Added Day.
- Christopher Vecchio, senior currency strategist at 3.I.g. Roup in New York said it was now unlikely that any new stimulus package would be announced before November 3. This will keep the market range-bound in the short term.
- Richard Baker, the editor of Eureka Mining, said he was bullish on gold this week but expected prices to be limited to around $1,920. “Without surprises at the end of October, it is hard to imagine a market driver pulling gold out of its recent resilience,” he said. However, Baker said that looking ahead to the next two weeks, he still expects gold to rise to $2,200 by the end of the year. “The long-term outlook for the dollar has darkened as expectations have grown that the Federal Reserve and Treasury will be generous when the rescue package is finally approved. Us benchmark real interest rates are negative, which is good for non-interest-yielding assets such as gold and silver. It’s worth noting that inflation expectations have picked up in the near term to where they were in August, “Baker added.
- Nicholas Frappell, global managing director of ABC Bullion, said he expects gold to test support at about $1,888 in the near future. “I think there will be more buying of the dollar in the days leading up to the US election,” he said.