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GOLD - 23/10/2020

Micro Analysis

23 October, 2020

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

MID-TERM TREND: UP

Gold: Overview

  • 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. The latest development requires 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). Talks between the Democrats and the White House are expected to continue and the number they assumed to be negotiation is 1.9 trillion dollars.
  • 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.
  • SAFE-HEAVEN DEMAND FOR GOLD DUE TO COVID-19 TRIGGERED FINANCIAL CRISIS: Gold could be expected to continue recovering 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.
  • ANALYSTS OPINION (CITIGROUP and UBS): CITIGROUP said Gold could hit a record before the year-end, aided in part by the risks surrounding the U.S. presidential election, according to Citigroup Inc. "Maintain our 0-3 month point-price target at $2,200/oz and a 6-12 month target at $2,400/oz". UBS has raised its forecast for gold next year from $1,850 to $2,100 per ounce.

Mid-Term Technical Outlook

  • Gold has continued to recover after losing around 100 dollars in September, when it tested levels below the mark of 1850.
  • From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index has recently fallen below the oversold threshold of 30.
  • 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. In addition, Gold also tried to break out through the mi-term downtrend line, which could be another bullish signal.
  • 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 1850 to the downside.


Graph: (Gold, Daily)

Current Price: 1900

GOLD

Mid-Term

Trend direction

UP

Resistance 3

2050

Resistance 2

2000

Resistance 1

1950

Support 1

1850

Support 2

1810

Support 3

1760

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 $

15,000.00

10,000.00

5,000.00

-5,000.00

-9,000.00

-14,000.00

Profit or loss in €**

12,668.92

8,445.95

4,222.97

-4,222.97

-7,601.35

-11,824.32

Profit or loss in £**

9,670.93

7,633.59

3,816.79

-3,816.79

-6,870.23

-10,687.02

Profit or loss in C$**

19,681.50

13,121.00

6,560.50

-6,560.50

-11,808.90

-18,369.40

* 1.00 lot is equivalent of 100 units
** Calculations for exchange rate used as of 9:22 a.m. (GMT+1) 23/10/2020
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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