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Gold Price Starts The Week Positive

September 21, 2020

gold price

The precious metal starts the trading week above 1,950 USD an ounce as experts look at the upcoming U.S. election, the USD, and the Federal Reserve announcements.

A week ago, gold was able to squeeze out a small gain of about 0.5% while trading in the region between 1,950 USD and 1,975 USD an ounce. This resulted in a second back to back weekly gain since the end of July.

At the time of publishing, gold was at $1,953.84, up 0.25% on the day.

Bannockburn Global Forex chief market expert Marc Chandler said that “From a technical perspective, it is hard to get excited about gold at the moment as it continues to chop between 1,900 USD and 2,000 USD, and it has not seen the extremes in a month. It is near the middle of the range.”

With all eyes on the Federal Reserve speakers, this week after the media ban has been lifted.

BBH Global Currency experts’ Win Thin and Ilan Solot summarised the week’s speakers “Brainard speaks Monday, followed by Evans and Barkin Tuesday. Chair Powell appears before the House Financial Services Panel with Treasury Secretary Mnuchin Tuesday, appears by himself before the House Panel on Covid-19 Wednesday, and appears with Mnuchin again before the Senate Banking Committee Thursday. Mester, Evans, Rosengren, Quarles, and Daly all speak Wednesday, followed by Bullard, Evans, and Barkin Thursday and then Williams Friday.”

The upcoming U.S. election risk is also on the cards with the death of liberal Supreme Court Justice Ruth Bader Ginsburg on Friday.

Pepperstone head of research Chris Weston said on Sunday that the “News of Judge Ginsburg’s passing is an incredibly important political factor in the US election, especially if we see the conservative Amy Coney Barrett getting the job.”

The largest impact will probably be on risk assets, Weston added. “The markets may struggle to price this accordingly and cleanly understand whether this plays into a greater prospect for Trump, or simply brings out more votes for the Democrats as many of the more moderate swing voters change to prior allegiances.”

gold price

The USD is probably going to stay under pressure this week, which should assist gold staying well supported, according to several experts.

Thin and Solot said that the “DXY traded Friday at the lowest level since September 10 and a break below the 92.478 area is needed to set up a test of the September 1 low near 91.746, the weak dollar trend should continue this week as we remain negative on the dollar due to the now-familiar combination of an ultra-dovish Fed and softening U.S. economic data.”

The USD index was last trading flat at 92.99, down 0.09% on the day.

Several datasets this week might also have an effect on the price of gold, in particular, the U.S. durable goods orders due out on Friday.

TD Securities head of global strategy Bart Melek said on Friday that the “Durable goods orders will be preliminary and anything modestly below expectations will likely mean the market will believe that the Fed will do more.”

Others are awaiting Tuesday’s existing home sales, Wednesday’s manufacturing PMI in addition to Thursday’s jobless claims and new home sales figures.

Experts have warned to keep a close eye on a potential rally to cash as the upcoming U.S. election draws near.

In addition, the possibility of the election being challenged is adding another layer of complexity.

Melek said “This is potentially very problematic,” he explained. “Political uncertainty tends to benefit gold. But if we have a full rout liquidity crisis, it is not going to be good for anything. People will go back into cash.”

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