Fiscal stimulus uncertainty as Covid-19 cases surpass forty million worldwide | The Gold Forecast

Fiscal stimulus uncertainty as Covid-19 cases surpass forty million worldwide

October 19, 2020 - 6:54pm

 by Gary Wagner

Although the White House is “cautiously optimistic” that they can reach a watered-down fiscal stimulus deal with the Congress before the presidential election, time is quickly running out. According to speaker of the House Nancy Pelosi a deal must be reached within the next 48 hours if any stimulus package is to be enacted prior to the presidential election.

This is occurring as Covid-19 cases have breached 40 million worldwide with 8,189,710 cases of the virus occurring in the United States. Global loss of life has surpassed 1.1 million with the United States accounting for roughly 20% of the global deaths. According to John Hopkins University of medicine the death toll in the United States is now at 219,950. Given that there are true hopes that a vaccine will be forthcoming, the probability that a viable vaccine will be available this year diminishes as two major developers of the vaccine have paused their stage III trials last week.

In Europe cases of new coronavirus infections are now in a second wave scenario which has resulted in many countries reinstating lockdowns and travel restrictions. Switzerland has implemented tighter restrictions which began on Sunday in attempts to control the second wave of infections that are hitting their country. These restrictions include a nationwide obligation to wear masks as well as a ban on large scale public gatherings. Italy also implemented new coronavirus restrictions as daily cases hit a record of 11,705 new cases on Sunday. Italian Prime Minister Giuseppe Conte in a news conference said that, “The situation is critical. The government is there but everyone must do their part.”

The lack of fiscal stimulus by the United States has resulted in dramatically lower prices in U.S. equities, with the Dow Jones Industrial Average losing 410 points in trading today. This decline amounted to approximately a 1 ½% decline in the Dow. The tech heavy NASDAQ composite lost 1.65%, while the Standard & Poor’s 500 gave up 1.63%.

This also led to a decline in the U.S. dollar which gave up 3/10 % and is currently fixed at 93.40. However, these factors were not highly supportive of gold pricing which resulted in gold futures currently trading unchanged on the day. Gold futures basis the most active December 2020 Comex contract is currently fixed at $1906.90, which is a net gain of $0.50 on the day.

According to the KGX (Kitco Gold Index) spot gold as of 4:59 PM EST was fixed at $1902.80 with traders actually bidding the precious yellow metal lower by $2.80. It was dollar weakness that accounted for over 100% of today’s gains contributing $5.90, resulting in a net gain today of $3.10.

According to our technical studies we see minor support in gold futures at $1900, with strong support at $1880. Resistance begins at $1920 with strong resistance at $1941 which is the 23% Fibonacci retracement of the rally beginning in March and concluding at the record high which occurred during the first week of August.

Wishing you as always, good trading and good health,

Gary S. Wagner - Executive Producer

This report is now free and publicly available to everyone

Gold Forecast: Proper Action

We are currently flat with no active trades after taking profits as our stops were hit last week.

Trades we closed on October 13
Long December gold at $1890, out at $1909.30 for a profit of $1,930.00
Long December silver at $23.95, out at $24.50 for a profit of $2,750.00
Long Forex gold at $1883.68, out $1907 for a profit of $23.32 per ounce
Long GLD ETF at $178.03, out at $179.80 for a profit of $1.77 per share
Long SLV ETF at $22.66, out at $22.03 for a loss of $0.63 per share
Long December Silver (SI Z20) @ $27.07 - Stop hit @ 25.56 for a loss of $1.51 per ounce
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 December gold (GC Z20) @ $1947.00 - Stop hit @ $1952 for a profit of $500.00 per contract
Long Forex gold (XAU A0-FX) @  $1939.00 - Stop hit @ $1944.80 for a profit of $5.80 per ounce
Long December gold @ $1956.50.Stop hit @ $1960 for a profit of $350.00 per contract
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 September silver at $26.68. Our stop was hit @ $26.87 for a profit of $1000 per contract.
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
Long September silver at $24.40. Our stop was hit @ $25.99 for a profit of $7950 per contract
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.
NUGT – we sold all shares and took profits of $33.19 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

With the presidential election just two weeks away, and Nancy Pelosi and Steven Mnuchin set to continue talks regarding a fiscal stimulus bill today, it seems unlikely that they will come to some compromise an agreement. It seems as though market participants in both gold and silver are awaiting news as to whether or not an agreement can be reached.

Today even with the lackluster performance in the US dollar which traded lower, gold and silver were unable to stage any real rally. In fact, gold futures prices reached an intraday high of $1923 in trading overseas last night, it was unable to hold those gains and closed with fractional gains on the day.

On today’s video report we will discuss the necessary parameters that we need to see in order to trigger a buy signal on both gold and silver. We will also discuss critical levels of both support and resistance.

Market Overview

Economic Calendar