- Gold prices crumble below counter-trendline resistance despite bullish fundamentals.
- Global coronavirus spread, US elections and stimulus uncertainty all in the mix.
The price of gold has been testing the bearish commitments above the $1,900 psychological level following a brief spell below it, printing a low of $1,891.50.
US election and stimulus news is dictating the flows in and out of the precious metal and has kept it coiled in a tight range of prior sessions.
However, despite the bullish fundamentals, the price has been chipping away at lower lows below trendline resistance.
Global stocks pressured on covid headlines
European stocks ended the day sharply lower and the negative sentiment has fed through to Wall Street setting the Dow for its worst day in more than seven weeks.
The major indexes are down Dow 2.7%, S&P 2.1%, Nasdaq 1.75%.
New infections have touched record levels in both Europe and the United States.
El Paso in Texas is asking citizens to stay at home for the next two weeks while, in Europe, Italy and Spain imposed new restrictions.
Stimulus doubts before election
Meanwhile, chances of a fiscal stimulus before the presidential election faded again at the start of the week.
US Treasury Secretary Steve Mnuchin said there are still areas in House Speaker Nancy Pelosi's plan that President Donald Trump cannot accept.
The combination of risks in the count down to the US elections has seen Wall Street's fear gauge VIX hit a near seven-week high.
The growing uncertainty fuelled by the second wave of the coronavirus, it would be reasonable to expect gold to benefit.
Additionally, analysts at TD Securities argued that there is evidence that some investors are willing to look beyond the election and in favour of gold:
''Indeed, the renewed weakness in the USD and prospect of global reflation amid large scale fiscal stimulus post-election continued to support gold and saw COMEX positioning grow.''
''While these factors should see the yellow metal move higher after the election, the bear steepening in the yield curve in a Blue Wave scenario could serve as a hindrance to gold upside in the immediate aftermath.''
Gold levels
However, from a technical standpoint, there is an argument for a near-term liquidation.
The Chart of the Week: Gold under pressure below key counter trend-line
In the above analysis of yesterday, the lows achieved by bears on Monday were forecasted as part of a bearish analysis, which is illustrating the technical case for further downside:
-637392462920845139.png)
Monday's volatility, so far
-637393319861157825.png)
The price has risen back to test the bearish commitments in the 1900s in an aggressive bullish correction after meeting the downside support structure.
A continuation to the downside would be expected on a break of the said support structure.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD continues soft as markets digest employment data
The AUD/USD declined by 0.34% to 0.6470 in Thursday's session, extending its decline to a fresh three-month low of 0.6460. The US Dollar is easing after mixed data, while weak Australian employment data has reduced inflationary concerns, which might change the outlook of the Reserve Bank of Australia.
EUR/USD: Further declines remain well in store
EUR/USD briefly tested fresh year-long lows on Thursday, piercing the 1.0500 handle for the first time in 54 weeks. A lack of meaningful EU data is doing very little to provide support for the Euro, and Fiber bids continue to tilt in favor of the safe haven US Dollar.
Gold falls as Powell signals Fed's patience on lowering rates
Gold recovers some ground on Thursday yet remains trading below its opening price for the fifth consecutive day, undermined by the Greenback’s advance for its own fifth consecutive day. A slightly hot inflation report in the US and solid jobs data sponsored XAU/USD’s leg down toward the 100-day SMA.
Ethereum Price Forecast: ETH could rally to $4,522 despite mixed on-chain flows among investors
Ethereum is down over 1% on Thursday following record net inflows across ETH exchange-traded funds in the past six days. Despite the bullish market outlook, $300 million worth of unstaked ETH could hit the market and cause downward pressure on prices.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.