September has not been a great month for Gold.
The precious metal has depreciated almost 4.5% over the past 29 days thanks to a resurgent Dollar, China’s ongoing economic recovery and frequent bursts of optimism around a coronavirus vaccine. However, as identified earlier this month – the key fundamental themes supporting Gold in the medium to longer-term remain firmly intact.
One of the major risk events and possible market shakers this week will be the televised debate between US President Donald Trump and Democratic challenger Joe Biden which is scheduled to begin at 9 pm US Eastern Time (ET). Such a significant event has the potential to create shockwaves across financial markets, especially when considering its potential impact on the course of U.S policies. Investors are likely to use Tuesday’s debate to gain further clarity into Trumps & Biden’s policy ahead of November’s election. Trump is seen as the more market-friendly candidate but national polls show Biden at a significant advantage. If market players are left empty-handed after the debate with more questions than answers, this could spark a fresh wave of risk aversion that revives appetite for Gold.
Over the past few weeks, the precious metal has been pulled and tugged by various directional catalysts. It will be interesting to see whether the presidential debates trigger explosive levels of volatility in Gold that result in a breakdown or breakout scenario.
Looking at today’s economic calendar, an army of FOMC members will be speaking this afternoon. If members sound dovish about the US economy, this could boost safe-haven demand for the Greenback consequently dragging Gold prices lower.
Focusing on the technicals, bulls have the potential to fight back if $1845 proves to be reliable support. Prices are trading above the 100 Simple Moving Average but the MACD trades to the downside. A solid daily close above $1890 could encourage an incline towards $1900 and $1965, respectively. Alternatively, a decisive break down below $1845 may open a path lower towards $1820 and $1800.
Ultimately, where Gold concludes this week will not only be influenced by the presential debate, but Brexit talks, coronavirus developments and US jobs report on Friday. It must be kept in mind that rising coronavirus cases across the globe, political uncertainty ahead of November’s US Presidential elections and extremely low to negative government bond yields are likely to support buying sentiment towards Gold as we enter the final quarter of 2020.
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