Spot gold continued its slide on Thursday, hitting an intraday low of $1,852.59 an ounce. The steady flow of positive vaccine news has sharply reduced the risk aversion in the market, even as economic data shows signs of a slowing recovery, but the market has begun to plan for the outbreak to be contained as soon as possible. Combined with the technical downtrend, gold is still facing many headwinds, but the bulls are not going to let go easily and are still expected to rely on safe-haven demand to organize a moderate counterattack, although the strength of the counterattack may be limited.
New data from the Labor Department showed an unexpected rise in U.S. jobless claims last week and a surge in confirmed coVID-19 cases, sparking a new wave of unemployment and further slowing the labor market recovery. The number of U.S. workers filing new claims for jobless benefits rose to 742,000 in the week ended November 14, compared with economists’ forecasts of 707,000. The previous week’s number was revised to 711,000 from 709,000. However, the four-week average of new claims for state unemployment benefits fell to 742,000 from 755,250 in the previous week, revised down to 755,750.
Daniel Zhao, senior economist at Glassdoor, said the high number of jobless claims is unhealthy. He also warned that gains were being exhausted and that the programs to support the economy approved earlier this year were about to expire.
At the same time, the geopolitical risk caused by the continuous tension between China and the United States makes the market still have some safe-haven demand, which is also the basis for gold bulls to organize a counterattack. The 70-odd pages of state Department documents examining the Communist Party’s “pernicious behavior” and its ideological origins, China’s vulnerabilities, and how the US and its Allies should respond have provoked a backlash from Beijing.
In addition, Reuters reported, local time on November 18, Australia, Britain, Canada, New Zealand, the United States, foreign ministers issued a joint statement said Hong Kong lawmakers qualification loss “in violation of the provisions of the Sino-British joint declaration of the legally binding international obligations, breach of commitment to Hong Kong” a high degree of autonomy “, and against “free speech” rights “.
Yet despite the uncertain outlook, the recent trend in gold is clear. Since Pfizer and BioNtech’s vaccine announcements, gold has been under constant pressure. Gold futures suffered their biggest one-day fall in seven years. This week, new vaccine news from Moderna and Pfizer underscored the high likelihood that coVID-19 will be brought under control next year.
In technical terms, gold’s rally on the daily chart this week was blocked by the upper triangular shape and the 20-day daily resistance zone (1980-1900), with successive declines followed by retests of key support platforms (1850-1860) since August. In the short term, once the effective break of 1850 May opens up the room for a significant fall, the downward support focus on 1820 and 1800 levels. If the short – term rebound, then the above – level attention to 1865 and 1880 and so on.
Analysts believe gold could break through the $1850 to $1860 / ounce support zone in the next few days, and once it does, then move on to the $1750 to $1760 / ounce support zone.
Hareesh V, head of commodity research at Geojit Financial Services. Said a weak dollar, a deepening epidemic and expectations of new US stimulus measures could limit a sharp fall in gold prices. However, he added that a break below strong support levels of $1,840 could take gold to $1,780 – $1,750 an ounce or even lower.
Edward Meir, the analyst at ED&F Man Capital Markets, said: “The launch of the vaccine has reduced gold’s appeal as a safe haven. While gold still appears to be in a trading range, the big rally appears to have ended.”