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James Hyerczyk

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Reports are going to have little impact on gold because all of those reports represent data accumulated prior to the current surge in COVID-19.

Gold futures settled sharply lower last week with most of the losses taking place in one session, while the rest of the week, the market attempted to claw back these losses.

The market plunged nearly 5% last Monday after Pfizer said its experimental COVID-19 vaccine was over 90% effective based on initial trial results. However, the vaccine optimism was tempered throughout the week by a spike in coronavirus cases in the United States and Europe.

A Reuters tally showed novel COVID-19 cases soared by more than 100% in 13 U.S. states in the past two weeks, while the global tally crossed 52.45 million, underpinning the need for more stimulus.

Last week, December Comex gold settled at $1886.20, $65.50 or -3.36%.

Despite the steep sell-off, gold prices remained underpinned by the prospect of continued monetary stimulus by the U.S. Federal Reserve and the hopes of fresh fiscal stimulus from the U.S. Government.

Beware of Companies Announcing Vaccine Results

Given the reaction in the market to the Pfizer news on Monday, gold investors have to be wary of other companies announcing trial data in the coming weeks. Any news touting a successful trial could put more pressure on gold prices.

In addition to the Pfizer vaccine news, Moderna said on Wednesday it has enough data for a first interim analysis of the late-stage trial of its experimental COVID-19 vaccine, which should help determine the vaccine’s efficacy.

The announcement from Moderna had little effect on gold prices because the skeptics are out there. Despite the huge stock market rally and gold market plunge last Monday, traders are now focusing on the many hurdles before vaccines get into widespread use and COVID-19 is brought under control.

According to Bloomberg, questions about production, distribution, and most important, the capability of the shot itself still need to be answered. Pfizer’s late-stage trial started less than four months ago, and how long the vaccine will confer protection is unknown.

“The key question still centers upon time, says Michael Kinch, a drop development expert and associate vice chancellor at Washington University in St. Louis. “Will time tell us that the protection remains useful for the larger population?

Bloomberg also added, “Pfizer’s coronavirus vaccine has shown more than 90% efficacy in early tests. But there will be shortages of any successful shot, so masks aren’t going away anytime soon.”

Weekly Forecast

U.S. economic reports are going to have little impact on the gold market this week because all of those reports represent data accumulated prior to the current surge in the number of COVID-19 cases in the United States.

Instead investors should focus on Treasury yields and the U.S. Dollar. Rising yields could put pressure on gold prices while falling yields should provide support. If there is going to be surprise news, it’s likely to be about fiscal stimulus. This would be bullish for gold because it should drive down rates and the U.S. Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Author: James Hyerczyk

Source: Fx Empire: Price of Gold Fundamental Weekly Forecast – Underpinned by Fading Vaccine Optimism, Monetary Stimulus

The price action the last four sessions indicates that the next move is likely to be determined by trader reaction to $1889.70 and $1917.40.

Gold futures are lower late Friday in choppy trading, with gains capped by a firm dollar. Nonetheless, bullion remained on track for its biggest weekly rise in eight weeks as U.S. President Donald Trump’s COVID-19 positive test hurt risk sentiment.

At 18:49 GMT, December Comex gold futures are trading $1908.70, down $7.60 or -0.40%.

Prices were on course to rise 2.3% this week, which would be the biggest weekly percentage increase since early August.

Although gold jumped to a one week high after Trump initially tweeted his condition, gains were limited as the dollar too benefited from safe-haven inflows.

In other news, gold was underpinned by a weaker than expected non-farm payrolls report on the notion that it could encourage lawmakers to more faster toward a fiscal stimulus deal.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through $1851.00 will signal a resumption of the downtrend. The main trend changes to up on a move through $1983.80.

The main range is $1690.10 to $2089.20. Its retracement zone at $1889.70 to $1842.60 is support.

The minor range is $1983.80 to $1851.00. Its 50% level at $1917.40 is resistance. This level stopped the buying on Friday.

The short-term range is $2089.20 to $1851.00. Its retracement zone at $1970.10 to $1998.20 is the primary upside target.

Short-Term Outlook

The price action the last four sessions indicates that the direction of the next move is likely to be determined by trader reaction to $1889.70 and $1917.40. The sideways price action suggests the next move will be headline driven.

These are critical levels because both could trigger accelerations since there is room to the upside and the downside to run.

A sustained move over $1917.40 could trigger an acceleration to the upside with $1970.10 a potential upside target.

A sustained move under $1889.70 could lead to an acceleration to the downside with the next likely target $1851.00 to $1842.60.

For a look at all of today’s economic events, check out our economic calendar.

Author: James Hyerczyk

Source: Fx Empire: Gold Price Futures (GC) Technical Analysis – Strengthens Over $1917.40, Weakens Under $1889.70

Gold prices could pick up some support this week if investors continue to remain cautious about the trade deal between the United States and China. Gold could also get a boost on the back of uncertainties surrounding the U.S. political outlook. Gold traders should also pay attention to the price behavior in the U.S. Dollar after the greenback plunged against a basket of currencies on Friday.

Gold futures finished higher last week despite the announcement of the U.S.-China trade deal and the positive outcome of the U.K. General Election that lifted some of the uncertainty over global economic growth. Traders said the Fed’s dovish tone, the weaker U.S. Dollar and worries over President Trump’s impeachment provided most of the support.

Last week, February Comex gold settled at $1481.20, up $16.10 or +1.10%.

The Trade Deal

U.S. President Donald Trump and Chinese officials said Friday that they have agreed to a “phase one” trade deal that included cutting American tariffs on Chinese goods.

Election Victory for Britain’s Brexit-backing Conservative Party

U.K. Prime Minister Boris Johnson’s Conservative Party won a commanding majority in the country’s general election, granting Johnson the power to drive through his Brexit deal and take the U.K. out of the EU before the January 31 deadline. The result was the party’s biggest election win since 1987.

Fed Leaves Rates Unchanged, Indicates No Changes Through 2020

Earlier in the week on Wednesday, the Federal Reserve held interest rates steady following its two-day meeting this week and indicated that no action is likely next year amid persistently low inflation.

Weekly Forecast

Gold prices could pick up some support this week if investors continue to remain cautious about the trade deal between the United States and China. “Although there seems to be some progress, the lack of details is causing a lot of concern that we’re not far long in the trade deal as people would like and as a result we are getting flight to safety,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

Gold could also get a boost on the back of uncertainties surrounding the U.S. political outlook. A Democratic-controlled U.S. House of Representatives committee approved charges of abuse of power and obstruction against Republican President Donald Trump on Friday, making it almost certain he will become the third American president in history to be impeached.

Gold traders should also pay attention to the price behavior in the U.S. Dollar after the greenback plunged against a basket of currencies on Friday as news of an initial China-U.S. trade deal and an election victory for Britain’s Brexit-backing Conservative Party appeared to clear the fog on the global investment horizon, hurting safe-haven demand for the greenback.

The major report this week is Monday’s Flash Manufacturing PMI. It is expected to come in at 52.6. A weaker than expected number could boost gold prices if it triggers a drop in demand for risky assets and Treasury yields.

Author: James Hyerczyk

Source: FX Empire: Price of Gold Fundamental Weekly Forecast – Underpinned by Weaker Dollar, Cautious Response to Trade Deal

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