Gold don’t like Mondays
Tony Sycamore November 24, 2020 2:40 PM
For the third Monday in a row, gold fell sharply, leaving November likely to be one that gold bulls would sooner forget.
When examining the reasons why gold finally breached the key $1850 support zone overnight, it’s partially been in response to a “third dose” of positive vaccine news. This time from the AstraZeneca/Oxford team who proposed an accelerated timeline for vaccine distribution and whose vaccine only needs to be refrigerated at normal fridge temperature.
Also playing a part, increasing optimism that Brexit negotiations will soon be concluded, as well as a sharp reversal higher in the U.S. dollar in the wake of much stronger than expected U.S Flash PMI data.
The PMI data suggests the U.S. economy is on a stronger footing than expected despite surging COVID-19 cases and raises questions as to how much extra fiscal stimulus is needed. Less stimulus and a higher U.S. dollar, generally act as a headwind to gold.
Finally, this morning, reports that the U.S. General Services Administration informed Joe Biden that President Trump authorised federal agencies to begin working on the transition of power. While this falls short of Trump conceding defeat, it does remove some of the tail risks around a disorderly transition following the election.
Where does this leave gold?
It’s been exactly two months since my last note on Gold here. An accurate reflection of my medium-term bullish view of gold, contrasted with uncertainty in the short term as to whether Gold needed to undertake another leg lower as part of its correction from the August $2075 high.
The break below the $1850 support, warns the next leg of the correction (Wave c of Wave IV) from the November $1966 high is underway, targeting a move towards wave equality at $1740.00. From the $1740 area, I will be looking for signs of stabilisation/basing in anticipation of the uptrend resuming and a buying opportunity.
Keeping in mind, a break close back above $1850/60 formerly support, now resistance would be the first indication the uptrend has resumed and that a retest/break of the $2075 high is underway.
Source Tradingview. The figures stated areas of the 24th of November 2020. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.