Gold gains as easing dollar, U.S. stimulus hopes bolster appeal
· Gold prices rose 1% on Friday, supported by a weaker dollar and optimism over a new U.S. coronavirus relief package after President Donald Trump said talks with Congress had restarted.
· Spot gold gained 0.9% to $1,910.96 per ounce by 0310 GMT. It was up 0.7% for the week. U.S. gold futures were up 1.2% at $1,916.90.
· The dollar index, which was down 0.2% against its rivals, was headed for a second straight weekly fall.
· Renewed hopes for another fiscal stimulus pulled the dollar lower and raised expectations of a pick-up in inflation, said Howie Lee, an economist at OCBC Bank.
· “The $1,900-level is a sticky one and, in my opinion, gold is going to trade around this level until the (U.S.) presidential elections,” Lee said.
· In an interview, Trump said there was a good chance a deal over Covid-19 relief could be reached, but gave no details of such a pact.
· “We expect gold prices to continue to gather strength as market volatility rises with the November U.S. presidential elections fast approaching, albeit with ebbs and flows,” Fitch Solutions said in a note.
· A widening lead for Democratic presidential candidate Joe Biden was also seen as opening the way for a big economic stimulus.
· Gold Price Analysis: XAU/USD recaptures $1900 on US stimulus hopes, eyes on $1928 cap – Confluence Detector
The Technical Confluences Indicator shows that Gold is looking to extend the bullish momentum above the critical barrier at $1910, the previous low on one-hour.
Acceptance above the latter will expose the next upside target at $1918, which is the confluence of the previous week high and Bollinger Band four-hour Upper.
Further north, the focus remains on the next significant cap aligned at $1928, where the pivot point one-week R1 lies.
On the flip side, strong support awaits at $1904, the Fibonacci 38.2% one-month, a break below which could expose the $1900 support area.
Sellers would then target the critical cushion around $1895, the meeting point of a cluster of healthy support levels, including the Fibonacci 23.6% one-day, SMA50 four-hour and SMA200 one-hour.
The last line of support for the XAU bulls is seen at $1892, which is the convergence of Fibonacci 38.2% one-week, SMA50 one-hour and SMA10 four-hour.
· Gold Price Forecast: XAU/USD eyes Friday’s close, US stimulus hopes down the dollar
The technical set up for gold looks interesting, with the price on the verge of confirming a falling wedge breakout should it close Friday above the falling trendline resistance at $1909.
On a bullish breakout, the immediate resistance of 50-DMA at $1939 could test the bulls’ commitment, as the metal heads towards the record highs of $2075.
Alternatively, the bears could regain control on a failure to validate the pattern, opening floors for a retest of the critical 100-DMA support at $1862.
· Global gold ETF holding surpass 1,000 tonnes for the year in September: World Gold Council
the WGC said that holdings in global gold-backed exchange traded products grew by 68.1 tonnes last month.
“Gold ’s 3.6% September pullback was likely tactical in nature. Gold rallied sharply (22%) between April and July, reaching an all-time high in early August. When prices move this quickly there is often a subsequent pause or pullback in the price related to profit-taking or positioning,” the analysts in the report said.
For the third quarter, the WGC said that holding grew 7%.
The latest increase in inflows has pushed global holding for the year above 1,000 tonnes, a new record high. The WGC said that the value of assets under management is also at a record high of $235 billion for the year.
Analysts at the WGC said that the fact that investors continue to add gold even in a declining price environment is an indication of growing interest in long-term strategic positioning.
· Silver rose 2.1% to $24.33 per ounce and was up 2.6% for the week. Platinum was up 1.3% at $873.65 and palladium was 0.3% higher at $2,380.36.
Reference: CNBC, Kitco, FXStreet
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