International spot gold three (October 28) confined plunged nearly $40, lowest intraday hit $1869.23 an ounce, down nearly 2%, because of the new champions league cases surge could trigger a blockade measures worries on Wall Street is aggravating, and in a short period of time seems to be the United States cannot launch effective fiscal stimulus, which makes the recovery faces great challenge, market funds have flocked to the dollar for safety. Overall, in the absence of stimulus and risk aversion ahead of the election, gold and stocks have had to fall again in tandem with a stronger dollar.
The United States, Russia, France and other countries have seen record Numbers of cases in recent days as winter approaches in the northern hemisphere and people gather indoors, raising the risk of infection. France has now become the epicenter of the second wave of coVID-19 that is sweeping across much of Europe, forcing hospitals to prepare for a surge in new patients on Tuesday and prompting the government to consider imposing tough new restrictions in some places. Meanwhile German Chancellor Angela Merkel has agreed to a partial month-long blockade in Germany. Bloomberg reports, “With novel Coronavirus infections continuing to rise across Europe, Merkel is pushing for a partial German lockdown that will include closing bars, restaurants and leisure facilities by the end of November. And the lesson that the rest of Europe has learned from France is that a tighter blockade is better than a semi-blockade, because the latter may not work and needs to be tightened again.”
Forexlive noted that the number of novel Coronavirus infections increased today is not surprising as it has been on the rise for several weeks. The uncertainty surrounding the US election has lasted much longer. There was actually no big surprise today, but the questions about the election deadline and the approaching winter were frightening. All the traders and investors who thought they had the muscle are cashing out. There is no telling what the outcome will be, but in the next five days it is safe to say that any turbulence felt by the markets today will not go away before November 3rd.
At the same time, election news has rattled investors, who have been cautiously betting on a Biden victory and a possible Democratic sweep to regain control of the Senate, with national polls consistently showing Mr. Biden ahead of Mr. Trump. But in the swing states that determine the outcome of the election, the race remains tight, keeping investors on their toes.
Nobuhiko Kuramochi, market strategist at Mizuho Securities, said: “The gap between Biden and Trump seems to have narrowed slightly recently. In particular, Biden’s lead in swing states looks no different than Hillary Clinton’s did in 2016. “People remember 2016 and those who had bet on a big Democratic victory were likely to take some profits before the election.”
On a technical daily chart, gold has broken out of a recently extended triangle pattern and broke the temporary $1,887 / ounce support of its 100-day moving average, indicating that bear sentiment has strengthened. Buoyed by inflationary pressures in the absence of fiscal stimulus, gold bears may want to look further down to the September 24 correction of $1,848.22 an ounce, even if geopolitical risks and election uncertainty still provide some safe-haven support.