International spot gold (28 September) low stabilization, looks set to restart a new round of consolidation, the highest intraday hit $1876.90 an ounce, because the us election, outbreak and means a lot of uncertainty, the U.S. economic recovery, so investors might be more cautious before the election, the dollar still has become the biggest driver in the market, it also lead to gold to begin testing the 100 – day moving average, technical strength of the key will also be in the near future.
Still, Sebastien Galy, macro strategist at Nordea, said investors are in a state of “buying on the dip-and-dive” and the stock market “hasn’t hit bottom yet.” Monday’s rally could have been caused by fund managers buying stocks at the end of the month to balance their portfolios, he said.
The resumption of the decline may bring a certain level of safe-haven buying of gold, at the same time, the euro, sterling and other cyclical currencies rebound against the dollar pressure is also conducive to the rise of gold prices.
On the other hand, as the US election approaches, there is a potential risk that “October surprises” — blockbuster news in the month leading up to the election — could affect the outcome, opening the way for a rally in safe-haven assets such as gold.
On the geopolitical front, the overall situation remains tense. Taiwan media on Sunday reported that another PLA fighter jet entered the airspace southwest of Taiwan on September 27, marking the 12th consecutive day that PLA fighters have entered the airspace. The frequent presence of PLA warplanes in the vicinity of Taiwan and their training exercises in recent days has aroused concern in Taiwan. Meanwhile, the United States has imposed restrictions on exports to China’s largest chipmaker SMIC International Corp (SMIC) because of “unacceptable risks” of equipment supplied to the chip maker that could be used for military purposes, according to new reports on Saturday from Reuters and the New York Times. Smic said it had not received any formal notification of the restrictions and said it had no connection with the Chinese military.
In addition, news on Sunday deepened investors’ concerns at the start of the week. Armenia and Azerbaijan are reported to have clashed over nagorny Karabakh, or Nagorny Karabakh. Clashes between Armenian and Azerbaijani forces on the contact line in the Nagorno-Karabakh region began in the evening of 26 September and at least one Azerbaijani helicopter was shot down. The Armenian Defense Ministry announced late Wednesday that 16 soldiers had been killed and nearly 100 wounded in the clashes. Both sides blamed each other for exacerbating the situation.
On a technical level, the four-hour chart shows a support rally near the top of the range in 1850 in recent days, which increases the chances of a further short-term rally near the top of the range in 1880.
But such a rebound would still not reverse the bearish outlook for gold, as the current 1850-1880 range is below the middle track of a potential downward path, and is still far from reliable support for the lower track.
Therefore, if the subsequent gold price cannot effectively break 1880, it will continue to face the risk of breaking 1850. Once the price falls below 1850, it may open the door to fall to the vicinity of 1800. However, if gold prices break above 1880 in effect, there could be further room for a rebound, possibly towards resistance levels such as 1900 and 1920.
Looking ahead to the week, Friday’s nonfarm payrolls report, the last before the U.S. election, is set to get a lot of attention. The median forecast from economists is for U.S. nonfarm payrolls to rise 865,000 in September, well below August’s 1.371 million, and the first net gain of less than one million since February, while the unemployment rate edged down to 8.2 percent from 8.4 percent.
Daniel Pavilonis, senior commodity broker at RJO Futures in New York, said the gold market is very close to its bottom, and for investors who think they’ve missed out on the gold rally, this could be a good time to get in and go long. “It’s all about the technology this week.”
Colin Cieszynski, chief market strategist at SIA Wealth Management in Los Angeles, said that with the dollar still rallying, gold is bearish in the short term. “It’s not gold, it’s dollars. The dollar dominates the market, and gold is no exception. Investors won’t be back in the gold market until there is another bout of volatility.”