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GOLD - 24/09/2020

Micro Analysis

24 September, 2020

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

MID-TERM TREND: UP

Gold: Overview

  • US FEDERAL RESERVE EXPECTED TO KEEP INTERETS RATES NEAR 0.00% FOR A LONGER TIME-PERIOD: Federal Reserve Chair Jerome Powell unveiled a new approach to setting U.S. monetary policy, letting inflation and employment run higher in a shift that will likely keep interest rates low for years to come. Following a more than yearlong review, Powell said Thursday that the Fed will seek inflation that averages 2% over time.
  • EXPECTED MORE US STIMULUS TO DEVALUE THE US DOLLAR, POSITIVELY SUPPORT GOLD: The Trump administration created the Lost Wages Assistance program in early August after a $600 weekly boost in unemployment benefits lapsed in July. The new program, which offered $300 a week for up to six weeks, is nearing its end in many states. At least nine states, including Alabama, Arizona, Idaho, Massachusetts, Missouri, New Hampshire, Rhode Island, Texas and Utah, have finished paying a $300 weekly unemployment subsidy to workers eligible for the money to date, according to state officials. The latest development require more action on the part of the Democrats and Republicans, which could increase chances for them to agree on a new stimulus package before the Presidential Election (November 3, 2020). Meanwhile, House Democrats, pushed to renew efforts for a second round of $1,200 stimulus checks.
  • SAFE-HEAVEN DEMAND FOR GOLD DUE TO COVID-19 TRIGGERED FINANCIAL CRISIS: Gold could be expected to recover as demand for safe-haven assets remains high, supported by rising financial market uncertainties due to growing number of coronavirus cases worldwide. Many markets participants fear over possible implementations of partial lockdown measures across many countries, which in turn could humper the ongoing global economic recovery.
  • CELEBRATED INVESTOR WARREN BUFFET INVESTS IN THE GOLD MARKET: As the coronavirus crisis escalated, the celebrated investor Warren Buffet added just a single new stock to his Berkshire Hathaway portfolio: Barrick Gold, a Canada-based gold mining company. Buffett's Barrick stock is currently worth about $565 million. Analysts believe that Mr. Buffet bets on higher Gold prices, which could be supportive of this metal prices in the period to come.
  • ANALYSTS OPINION (CITIGROUP): Gold could hit a record before the year-end, aided in part by the risks surrounding the U.S. presidential election (November 3, 2020), according to Citigroup Inc. They "Maintain 0-3 month point-price target at $2,200/oz and a 6-12 month target at $2,400/oz".

Mid-Term Technical Outlook

  • Gold has lost around 100 dollars over the past 3-4 trading sessions to test levels below the mark of 1850.
  • From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index fell below the oversold threshold of 30, signaling that the downside potential should remain limited.
  • Gold has also managed to stay above its 155 Day Exponential Moving average which has been lately acting as the support level.
  • Gold has also managed to stay above its former uptrend upper boundary, suggesting that it will try to preserve its recent mid-term uptrend.
  • On the upside, Gold could be expected to target Resistance 1 of 1950 and Resistance 2 of 2000 in extension. If, however, Gold fails to live up to the above-mentioned technical outlook, it could target Support 1 of 1758 to the downside.


Graph: (Gold, Daily)

Current Price: 1854.00

GOLD

Mid-Term

Trend direction

UP

Resistance 3

2050.00

Resistance 2

2000.00

Resistance 1

1950.00

Support 1

1758.00

Support 2

1710.00

Support 3

1660.00

Example of calculation based on trend direction for 1.00 Lot*

GOLD

Pivot Points

Resistance 3

Resistance 2

Resistance 1

Support 1

Support 2

Support 3

Profit or loss in $

19,600.00

14,600.00

9,600.00

-9,600.00

-14,400.00

-19,400.00

Profit or loss in €**

16,796.50

12,511.68

8,226.86

-8,226.86

-12,340.28

-16,625.10

Profit or loss in £**

15,399.24

11,470.86

7,542.49

-7,542.49

-11,313.73

-15,242.11

Profit or loss in C$**

26,232.64

19,540.64

12,848.64

-12,848.64

-19,272.96

-25,964.96

* 1.00 lot is equivalent of 100 units
** Calculations for exchange rate used as of 8:45 a.m. (GMT+1) 24/09/2020
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Senior Account Manager regarding their use.
*** You may wish to consider closing your position in profit, even if it is lower than suggested one
**** Trailing stop technique can protect the profit – Ask your Senior Account Manager for more details

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