Original title: Golden Week Review: The U.S. General Election Enters Countdown, Gold Is Not Surprised, European and American Heavy Economic Data Hit Next Week
FX168 Financial News (North America) News This week, gold’s long and short positions remained stalemate, still maintaining a wide trading range of around $1,900 per ounce. Due to the continuous reversal of the US stimulus plan negotiations, the negotiating parties continue to say that the gap is narrowing, but there are still certain differences, which led to the waning of market optimism, but there was a glimmer of hope that restricted the rise of gold. As the US dollar is weak and the second wave of epidemics in Europe and America is more serious, it is difficult for gold shorts to achieve a breakthrough. Next week, a large number of economic data including the third quarter GDP of the United States and the interest rate decisions of the European, Canadian and Japanese central banks are expected to have a certain impact on market trends.
(Spot gold daily chart, source: FX168)
Gold priceIt fell slightly this week. At the beginning of the week, the price of gold was slightly lower than US$1915/ounce. It touched near US$1930/ounce on Wednesday, but then fell back and finally closed at US$1901.05/ounce.
Gold falls into election anxiety, stimulus bill is constantly involved
Since the price of gold has always been highly dependent on the trend of the US dollar, the volatility of the US dollar depends on whether economic stimulus measures are introduced. However, because there are only ten days left in the US general election, it is difficult for the two parties to make substantial progress in negotiations, and both parties regard it as their own political bargaining chip. Most analysts believe that the stimulus bill may not be introduced until after the general election.
Tuesday was the deadline for negotiations on the stimulus bill, but the two parties only stated that the conversation was very “effective” and that “the difference was gradually narrowing.” Although Trump expressed his willingness to accept a larger rescue package, the Speaker of the U.S. House of Representatives Pelosi and US Treasury Chief Mnuchin accused each other on Friday that the other party should make efforts to push the negotiations forward. The possibility of passing the stimulus bill before the election is rapidly fading. Pelosi said Trump should push for consultations and get Republicans to nod and agree to any agreement with the White House on a nearly $2 trillion aid package. The White House negotiator Mnuchin said that significant progress had been made in the negotiations, but he accused Pelosi of refusing to compromise on the priorities of the Democratic Party, resulting in stalled negotiations.
Peter Hug, head of global trading at Kitco Metals, said: “Before this election, there is a catalyst that may push the price of gold up, and that is some kind of stimulus plan. As time goes by, this possibility is getting smaller and smaller. But the market is still Looking forward to it.” Hug pointed out that if there are stimulus measures from now to next weekend, the price of gold may exceed $1925. On the downside, support remains at $1875 and then at $1850. “Unless there is a massive sell-off in the market, the price of gold will not fall below this level.” On the other hand, if there are no additional stimulus measures before the election, any financial assistance may be postponed to January or February next year. “If the Democratic presidential candidate Biden wins, the stimulus plan may be postponed to January to February, when Biden will take office,” Hug said.
The last presidential debate held on Thursday night also attracted the attention of the market. Trump and Biden were arguing over issues such as the epidemic and international relations. Yafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities, said: “Trump’s performance this time is much more civilized than the previous one, and Biden also demonstrated leadership. The two basically did not put forward any new ideas, and the debate returned to normal. Yafumi Yamamoto believes that this debate will not change Trump’s chances of winning. He said: “From the futures and market reaction, it can be seen that Biden’s leading expansion will benefit the safe-haven products, but I don’t think this debate will have a significant impact, because many people have already voted. This is why after this debate The market’s response was flat.”
Currently, more than 50 million Americans have voted. The market has always believed that no matter who eventually enters the White House, it will be beneficial to the price of gold because more fiscal stimulus measures are inevitable, the low interest rate environment and the weakening of the dollar. However, they pointed out that the sweeping blue wave may trigger a larger price rebound.
Edward Moya, senior market analyst at OANDA, said: “Gold is still in the marginal range of stimulus policies.” “The fate of gold prices will be decided on election day. The blue wave implies huge stimulus measures. The price of gold will rise to $2,000. Den’s victory under the Republican control of the Senate implies that the price of gold will slowly rise,” Moya said.
Ryan McKay, commodity strategist at TD Securities, told Kitco News, “The election result will be the most important thing in the future, and how it will affect risky markets and fiscal stimulus measures. Both candidates will implement fiscal stimulus after the election. But one The wave of blue waves is the most beneficial because it will bring the largest expenditures and push up inflation expectations… This is preparing for another bull market in gold.”
Afshin Nabavi, senior vice president of precious metals trader MKS SA, said that the next week may be quite turbulent, as the market will continue to predict the outcome of the general election. “At least until November 3, there is unlikely to be any change. Gold prices are stuck in this wide range, with daily fluctuations of 10-20 US dollars,” Nabavi said.
The second wave of epidemics in Europe and America is severe, and the economy may be hit hard
The reported cases of coronavirus infection in Europe more than doubled within 10 days, and France and Spain have exceeded 1 million confirmed cases. Many European countries have once again adopted strict measures to limit the spread of the epidemic. The number of new diagnoses in many states in the United States has also reached a new high. As the weather in many parts of the United States turns cooler, the epidemic is on the rise again. Investors worry that it will lead to a re-blockade.
Hug said: “We are in the second wave of the new crown pneumonia outbreak, which may undermine our current fragile economic recovery.” He added that any major problems with the epidemic or a new major blockade could trigger a market sell-off similar to that in March. . “This may have an impact on the stock market, which in turn will cause people to scramble to raise funds. When people feel scared, the first impulse is to raise cash, and then due to the government’s response (usually by creating more money), the commodities sector Will be boosted.”
James Knightley, chief international economist at ING, said that as concerns about the second wave of the epidemic intensify and the United States has no new stimulus measures to support families, the economic recovery will be questioned.
Knightley said on Friday: “In an environment where unemployment benefits are gradually decreasing and new coronary pneumonia cases are on the rise, families and businesses are anxious that the United States may introduce some kind of containment measures. There are good reasons for fiscal stimulus.”
How will the price of gold go next week?
According to Kitco News’s latest Golden Week survey, as the recent gold price continues to consolidate at around US$1,900 per ounce, market analyst sentiment is obviously mixed; at the same time, retail investors are still extremely optimistic about next week’s gold; however, investment The interest in the market is still at a low point not seen since the beginning of the year.
Adrian Day, President and CEO of Adrian Asset Management, described the price trend and sentiment of the gold market as two steps forward and one step backward. He added that such fluctuations will continue until after the US election on November 3. He said: “Some investors are realizing all their assets before the election, while others are disappointed that gold has lost momentum. On the other hand, investors are taking advantage of lower prices to profit from possible long-term trends. “Either party wins the presidency and the Senate seat, which will be extremely beneficial to gold,” Day added.
This week, 17 analysts participated in the survey. A total of 7 analysts (41% each) expect gold prices to rise or move sideways next week; at the same time, 3 analysts (18%) expect gold prices to fall.
Although some analysts are optimistic about the price of gold in the short term, they believe that there will be no major breakthrough in the price of gold until the Democratic and Republican parties’ negotiations on further stimulus measures to support economic growth become clearer.
Christopher Vecchio, senior foreign exchange strategist at IGGroup, said that at present, it is unlikely that any new stimulus plan will be announced before November 3. This will allow the market to maintain range volatility in the short term.
Richard Baker, editor of the Eureka mining report, said that he is optimistic about gold next week, but expects the price of gold to be limited to about $1,920. He said: “In the absence of surprises at the end of October, it is difficult to imagine a market driver that will separate gold from recent elastic fluctuations.”
FX168’s weekly financial market survey also shows that analysts and traders are mostly bearish on the prospects of gold next week. Among traders and analysts who received weekly financial market surveys, the proportion of bearish gold reached 55.6%, and the proportions of bullish and expected consolidation each accounted for 22.2%.
Cao Bowen of Huijin Youdao expects that gold will consolidate next week. The reason is that gold will break through the upper track of the convergence pattern this week, but after the highest impact reached 1931, it still encountered resistance at the high point of October 12 in the previous period. , In the end it was just a fake breakthrough. Cao Bowen believes that gold may continue to fluctuate next week. “After all, the US election is approaching, and the market may be waiting and waiting. The main fluctuation range may be between 1894 and 1914; however, we must also consider the issue of market flaws. The strong resistance above is roughly 1933. The strong support below is at 1882.”
Next Wednesday and Thursday, the central banks of Canada, Europe and Japan will announce interest rate decisions and monetary policy reports respectively.
The actual third-quarter GDP of the United States will also be announced on Thursday. The data may show whether the economy can recover strongly after the downturn in the second quarter. Knightley said: “We expect the U.S. economy to grow at a record annual growth rate of 34.5%, thanks to the rebound in consumer spending when the economy is stagnant, and the increase in unemployment benefits that support household income. More than 70% of unemployment Relief recipients’ income is higher than their actual working income. Even after this impressive figure, we should note that economic output will still be 3.2% lower than at the end of the fourth quarter of 2019.”
On Friday, the Eurozone will release the third quarter GDP of France, Germany and the Eurozone, the October CPI of France and the Eurozone, and the Eurozone unemployment rate for September.
Important economic data and events next week
Monday (October 26)
Germany October IFO Business Climate Index
US September new home sales
The market is closed on the day following Hong Kong Chung Yeung Festival
Tuesday (October 27)
U.S. durable goods orders in September
Consumer Confidence Index of the U.S. Chamber of Commerce in October
Wednesday (October 28)
Australia third quarter consumer price index
Canadian overnight target interest rate
Central Bank News:
Bank of Canada announces interest rate decision and monetary policy report
Thursday (October 29)
Japan’s September seasonally adjusted retail sales
Germany’s October seasonally adjusted unemployment rate
US Personal Consumption Expenditure Price Index in the Third Quarter
U.S. real GDP in the third quarter
Eurozone European Central Bank refinancing rate
US September NAR seasonally adjusted existing home sales index
Central Bank News:
President Kaplan of the US Federal Reserve Bank of Dallas and former Governor Carney of the Bank of England hosted a panel discussion
Tokyo, Japan Bank of Japan announces interest rate decision
European Central Bank announces interest rate decision
Friday (October 30)
Japan’s September unemployment rate
Australia third quarter producer price index
France third quarter GDP
Germany’s third quarter seasonally adjusted GDP
French October Consumer Price Index
Eurozone October Consumer Price Index
Eurozone GDP in the third quarter
Eurozone unemployment rate in September
Canada August GDP
US September Personal Consumption Expenditure
US September personal income
U.S. October University of Michigan Consumer Confidence Index
Proofreading: Er Dongchen
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