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GOLD - 06/11/2020

Micro Analysis

06 November, 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 PRESIDENTIAL ELECTION UNSERTAINTIES (November 3): No winner is declared yet and many say that the winner might be declared after court processes. To this end, uncertainties are expected to prevail. If Arizona given to Biden, as he leads there, Democrat Joseph Biden Leads Donald Trump 264 vs. 214 electoral votes. The first that gets to 270 is the winner. Donald Trump leads in Pennsylvania and Georgia. Results are expected soon. Trump must win these two states to keep some chances of winning the election. Democrat Joseph Biden, on the other hand, needs only to win an additional outstanding state, such as Nevada (6 electoral votes) where he is leading. Meanwhile, Trump's campaign says it will go up to the courts to appeal.
  • EXPECTED MORE US STIMULUS TO DEVALUE THE US DOLLAR, POSITIVELY SUPPORT GOLD: The markets expect soon after the official election results are announced Democrats and Republicans will get back to the negotiating table to discuss another stimulus package. Some Republicans said that a new package should come before the end of 2020.
  • US FEDERAL RESERVE EXPECTED TO KEEP INTEREST 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 has said 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 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

  • From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index has recently recovered above the value of 50 to remain upward sloping.
  • Gold has also managed to stay above its 100 Day Exponential Moving average which has been lately acting as the support level.
  • Gold has also managed to stay above its mid-term uptrend line, suggesting that it will try to preserve its recent mid-term uptrend. In addition, Gold also managed to break out through the mid-term downtrend line, which could be another bullish signal.
  • On the upside, Gold could be expected to target Resistance 1 of 2000 and Resistance 2 of 2050 in extension. If, however, Gold fails to live up to the above-mentioned technical outlook, it could target Support 1 of 1872 to the downside.


Graph: (Gold, Daily)

Current Price: 1935

GOLD

Mid-Term

Trend direction

UP

Resistance 3

2100

Resistance 2

2050

Resistance 1

2000

Support 1

1872

Support 2

1820

Support 3

1770

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 $

16,500.00

11,500.00

6,500.00

-6,300.00

-11,500.00

-16,500.00

Profit or loss in €**

13,933.10

9,710.95

5,488.80

-5,319.91

-9,710.95

-13,933.10

Profit or loss in £**

10,607.05

8,754.77

4,948.35

-4,796.09

-8,754.77

-12,561.19

Profit or loss in C$**

21,554.94

15,023.14

8,491.34

-8,230.07

-15,023.14

-21,554.94

* 1.00 lot is equivalent of 100 units
** Calculations for exchange rate used as of 8:54 a.m. (GMT) 06/11/2020
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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