Gold yet again had an indecisive week just moving in between the support and the resistance which was on expected grounds as it awaits the event outcome. With this year’s most important and crucial event of Presidential Election being just 48 hours away, gold may remain highly volatile as even minute information/misinformation should lead to massive swings since the final result would be a massive decider over how the economy and currency moves forward for the next four years as there is a stark difference between the ideology and handling of both the contenders. This event will dominate the week but there are more news as well which poured in during the weekend with the most important being the surprising and hastily enforced month long lockdown in UK though not a mirror of the one in March but sufficient enough to disrupt economic growth again with other European countries already set for lockdown(s) again starting in first week of November as the spike in fresh covid cases risk overwhelming hospitals and other medical facilities . The surge in the new cases are not only seen in the Europe but the U.S as well which might also go for a lockdown post the election if required to flatten the curve again. This situation across the world is not at all a cause of surprise as historically seen the pandemic never ceases until after wave 3 and here it is just the start of wave 2 with many countries still under the influence of wave 1 and with winter coming it does look like a long dark road ahead as most promising vaccines (if any) wont be out before mid 2021. Thus the fundamental aspect of gold has overshadowed the technical one in terms of bullishness for the moment as the yellow metal offers maximum protection against uncertainty. To watch next week – U.S presidential election, Fed meet, BoE meet and other important economic data.
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Gold formed a red bar retracing back to the support as it awaits the direction though this may only be a retail trap since the trend never changed as both technical and fundamentals strongly support higher prices and with last week’s announcements it certainly clears the air over possible reduction in uncertainty in near future. Gold still remains in the breakout gaining additional support from the last month’s candle which suggests reversal as the downside maybe over. We have 2 scenarios –
1. Gold closed above the support, till this is held it can go to $1886. If this is crossed it can move towards $1901. And if this is taken out it can rally to $1921.
2. Bears still weren’t able to pull the metal below the support making their wait longer.
Bullish view – Bulls failed to hold $1900 as they were again tested with the metal falling back to the support and finally settling back comfortably above it which shows the nature of the trend which remains bullish until it changes which looks a sight quite far away as the global uncertainty remains at highs with many countries reimposing lockdown(s) due to surge in virus cases which should remain a cause of hindrance to the economic growth if any. This year’s most important event of U.S presidential election could also play the catalyst to a directive move after days in consolidation. Fundamentals remain overly supportive for higher prices whereas technicals still lack direction as the metal remains in consolidation with a bullish bias.
Bearishness still fails to entice.
On larger terms, gold continues to remain bullish and prices are expected to head higher.
Possible trades are on both sides but mainly on upside, gold can be bought above $1890 for the targets of $1901 and $1921 with a stop loss placed below $1876. Longer term target $1945.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
Shorts can be useful for scalp trades only.
Reference: Trading View
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