Whats happening to Gold market? Check out the Fundamental and Technical analysis of Gold here!
Gold prices dropped after the main event of the week, the Mid Term elections found the US with new developments making their way in the market’s processing system.
The outcome of the US election had significant effect on the precious metal’s prices as the adverse relationship which gold has with the USD is almost always in play.
The Democrats took the House of Representatives while the Republicans took the senate pushing the USD down, due to the scenario being expected.
Democrats have now more power and influence on the president’s decisions and in a way create some uncertainty.
But then again President Trump confirmed he is willing to work together for further economic growth of the country.
The US dollar initially dropped as the results were released which sent Bullion prices to monthly highs but corrected later on as the USD strengthened during the US session and the trend followed in today’s Asian and early European run.
Today the market awaits the FOMC meeting and despite the FED forecasted to remain on hold.
We could say the sentiment is for a hawkish accompanying statement.
However, in our opinion there is not much for the FED to prove or stress as we have been confirmed many times in the past, that the US economy is moving higher and higher.
Thus, the FED is willing to raise Interest rates once more this year but in the next meeting which takes place in December.
In late November, another event is expected to take place that has been a barometer for Gold prices.
The unending US Sino trade matter still pending, could be on its way for a solution as the US and Chinese presidents have arranged to meet, with the difference that this time a more positive environment being in place.
A telephone conversation held between the two of them was confirmed by President Donald Trump as he confirmed a positive tone was maintained.
Gold prices also hiked on the event due to the metal’s sensitive nature to risk appetite.
If the matter is to be resolved, some risk may be off the table as many market participants have addressed fears of the outcome of President Trump’s tariffs could hurt consumers and spending in the US but also other countries.
Furthermore, as now the Democrats took the House of Representatives, we may see a change in the US stance towards China and so this could support Gold prices.
By observing Gold’s movement in the previous months, it is evident that the precious metal traded mostly in a sideways movement during August and September, below the 1200 psychological threshold.
During October it broke out of that range and climbed some 20 USD over.
From that time until now, Gold stabilized above its previous range and even traded higher surpassing a 1230 level indicating that for a long run it could be in for a comeback to much higher levels.
Even though, bullion tends to make big movements, ranging from to 20 to 30 USD per day, it could follow some emotional corrections on the downside as the market gets sensitive and reacts to minor and major happenings.
Though in our opinion, a target driven trader does not fear when the market goes against him and holds up by maintaining his position whatever the direction is.
In our opinion, the precious metal has shown signs that it’s slowly recovering and it could rise higher, as we get closer to the holidays when demand is expected to pick up due to present seasoning.
In addition, China jewelry consumption has increased by a 2.3% year on year growth percentage indicating the trade wars have not affected Gold markets so much which is positive for the overall metal market.
On the contrary, investment in the Gold market has been seen diminishing in China, as investors maybe waiting for the right moment in order to make the move.
So the reduced Investment could be attributed to a more strategic action.
During today’s FOMC meeting Gold could be overtaken by a bearish movement if the expected hawkish statement takes place.
Bullion could drop below the (S1) 1218.64 and move even lower, aiming for the (S2) 1210.66 support area.
It must be noted that the precious metal has not broken below the (S1) 1218.64 level since the 11th of October.
On the contrary if the precious metal is undertaken by a bullish momentum then it could move towards 1230 psychological threshold and reach the (R1) 1232.93 level stabilizing around that level.
This is the scenario that the market does not expect, however surprises have been what the market is eager for.