Tonight’s debate and Friday’s jobs report could have a profound impact on gold prices
Both gold and silver both had respectable gains in trading today. Concurrently U.S. equities traded under moderate pressure, as traders and market participants await the outcome of tonight’s presidential debate.
As of 4:30 PM EST gold futures basis the most active December 2020 Comex contract is trading up $20.40, and currently fixed at $1903.30 a net gain of 1.12 %. December Silver futures performed brilliantly today gaining approximately 3.27% or $0.77 currently fixed at $24.375. These gains were aided by tailwinds provided by a weaker U.S. dollar. Currently the dollar index is at 93.93 down 37 points (- 0.39 %).
Both precious metals are trading higher acting as a safe haven asset in light of tonight’s first presidential debate to commence at 9 PM EST, set to take place in Ohio. With only 35 days until the election, tonight’s debate is expected to draw approximately 100 million viewers. While many analysts predict that the debate will not produce anything consequential, if either candidate is able to get under the skin of their opponent, we could witness a ‘no holds barred’ fight for the heavyweight championship of the U.S.A; the presidency.
While the outcome of tonight’s debate and forthcoming presidential election is unknown. According to Alan Lichtman’s predictions, the American University historian who has correctly predicted the outcome of presidential elections since 1984 there is a clear winner. He predicts that Joe Biden will win the 2020 presidential race.
Traders are also focused upon the recent spike in Covid-19 cases. According to data provided by Johns Hopkins University the global death toll has now exceeded 1 million souls, and the number of global infections has risen to 33,484,120. These numbers reflect the real potential for a continued global economic contraction.
And the debate is not the only major event that will occur this week. On Friday the U.S. Labor Department will release its jobs report for the month of August. Currently economists anticipate that the outcome for the key non-farm payrolls number to come in at 875,000 and the unemployment rate is forecasted to come in at 8.2%.
While this is extremely good news for the economy in the United States, for a large part this forecast has already been factored into current pricing. If the actual numbers come in well above, or well below the economist predictions financial markets will need to readjust pricing to address the actual numbers.
Today House Democrats revealed their $2.2 trillion stimulus package. This bill will need to be passed by both the Senate Republicans as well as the White House.
According to MarketWatch, “The proposal is a slimmer version of the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions, or Heroes, act, which passed in the House but was a non-starter for Senate Republicans due to its size and scope.”
A stimulus package would most certainly be bullish for the safe haven asset gold. It would take the already historically record high budget deficit even higher.
Concurrently tensions between the United States and China continue to grow, as the European Union and Britain have not been able to reach an amicable agreement. Collectively these issues and events will certainly have an impact on the financial markets, and have a high probability of being highly supportive of gold pricing moving higher.
Our technical studies indicate that now that gold is broken above $1900 per ounce the next resistance level occurs at $1919, the former record high achieved in the middle of 2011. Above that the next level would occur at approximately $1949, the current 50 day moving average. With major resistance at the key psychological level of $2000 per ounce. Support continues to be $1852, the price point for the 100-day moving.
Wishing you as always good trading and good health,
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Gold Forecast: Proper Action
We sent out a trade alert yesterday (09/28) and today (09/29)
Maintain long December gold at $1890. Maintain stop at $1851.10
Maintain long December silver at $23.95. Maintain stop at $$22.45
Maintain long forex gold at $1883.68. Maintain stop at $1847.50
Maintain long GLD ETF at $178.03. Maintain stop at $172.03
Maintain long SLV ETF at $22.66. Maintain stop at $20.03
Long GLD @ $183.91- stop hit @ $178.50 for a loss of $5.41 per share
Long SLV @ $ 26.33 - stop hit @ $23.53 for a loss of $2.80 per share
Long Forex gold (XAU A0-FX) @ $1939.00 - Stop hit @ $1944.80 for a profit of $5.80 per ounce
Long December silver @ $27.39.Stop hit @ $27.80 for a profit of $2050 per contract
Long forex gold @ $1948.55.Stop hit @ $1955 for a profit of $6.45 per ounce
Long GLD @ $183.57.Stop hit @ $184.36 for a profit of .79 per share
Long SLV @ $25.10.Stop hit @ $25.75 for a profit of .65 per share
Long December Gold at $1955.50. Our stop was hit @ $1979 for a profit of $2350 per contract
Long Forex Gold at $1947. Our stop was hit @ $1967,52 for a profit of $20.52 per Ounce
Bought GLD @ $166.74. Our stop was hit @ $$183.00 for a profit of $16.87 per share.
Bought SLV @ $18.00 Our stop was hit @ $23.80 for a profit of $5.80 per share.
Long December gold at $1997, we covered the trade @ $2035 for a profit of $3800 per contract
Long Forex gold at $1977, we covered the trade @ $2017 for a profit of $40.00 per ounce
Gold Market Forecast
In just under two hours the first presidential debate will begin. This could provide a level of uncertainty based upon the outcome of the debate that could take gold dramatically higher.
While we expect a professional discourse between the two candidates, it seems that that might be unlikely given the way President Trump tends to be little his opponents. The question is whether or not each candidate will remain cool, calm and collected. If one of them flinches we could see some real fireworks, that would create volatility in US equities as well as the precious metals.
We are currently positioned with the expectation that at best it will be a civilized debate with real issues being raised, and pertinent questions being answered, at worst will be an exchange like an MMA bout devode of civillity and ripe with charactor degradment from both.President Trump and Vice President Biden.
Both candidates will carry baggage into the debate providing ammunition for their component. Hopefully all statements will be above the waistline, but in my opinion, there is a genuine probability that that will not occur.