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GOLD - 24/11/2020

Micro Analysis

24 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 UNCERTAINTIES (November 3): Democrat Joseph Biden was declared the 46th President of the United States of America. But President Trump has not conceded yet, filing more lawsuits. Trump’s team has evidence to sue in as many as 10 states. Then ultimately the Supreme court could consider these legal challenges. Meanwhile, The General Services Administration acknowledged Joe Biden as the apparent winner of the presidential election on Monday (November 23). The designation triggers a formal transition process, giving Biden and his team access to current agency officials, briefing books and other government resources
  • 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. Goldman Sachs predicts a relief package to be approved in December amounting circa $1 trillion.
  • 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 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 lockdown measures across many countries, which in turn could humper the ongoing global economic recovery. Recent news from Pfizer on their significant COVID-19 vaccine progress injected some optimism within the markets, pushing down the value of Gold, but scientists agree that it will take time until a vaccine for mass vaccination is available.
  • ANALYSTS OPINION (CITIGROUP/UBS/Credit Suisse): 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 6-12 month target at $2,300/oz". GOLDMAN SACHS has raised their 12 month average target price to $2300 from previous $2000. UBS has raised its forecast for gold next year from $1,850 to $2,100 per ounce. CREDIT SUISSE updated their target price to $2175-$2300 per ounce.

Mid-Term Technical Outlook

  • Gold has lost more than 50 dollars following another sell-off earlier this week, which pushed the Gold price down to its lowest rate since July 2020 (1810)
  • From a technical perspective, Gold could be expected to recover as its Daily Relative Strength Index has recently fallen towards its oversold threshold of 30, suggesting a possible upward recovery.
  • Gold has also try to stay above its 200 Day Exponential Moving average, which has been lately acting as the support level.
  • On the upside, Gold could be expected to target Resistance 1 of 1880 and Resistance 2 of 1942 in extension. If, however, Gold fails to live up to the above-mentioned technical outlook, it could target Support 1 of 1740 to the downside.


Graph: (Gold, Daily)

Current Price: 1810

GOLD

Mid-Term

Trend direction

UP

Resistance 3

2000

Resistance 2

1942

Resistance 1

1880

Support 1

1740

Support 2

1700

Support 3

1650

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 $

19,000.00

13,200.00

7,000.00

-7,000.00

-11,000.00

-16,000.00

Profit or loss in €**

16,002.29

11,117.38

5,895.58

-5,895.58

-9,264.48

-13,475.61

Profit or loss in £**

11,961.38

9,866.72

5,232.35

-5,232.35

-8,222.27

-11,959.67

Profit or loss in C$**

24,746.93

17,192.60

9,117.29

-9,117.29

-14,327.17

-20,839.52

* 1.00 lot is equivalent of 100 units
** Calculations for exchange rate used as of 11:14 a.m. (GMT) 24/11/2020
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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