On October 6, 2020, gold traded with a mild negative bias during the early European session and was last seen hovering around the lower end of its dai
On October 6, 2020, gold traded with a mild negative bias during the early European session and was last seen hovering around the lower end of its daily range. The precious metal is hovering at around $1907.
Gold failed to capitalize on Monday’s goodish intraday move up of at least $30 from the two-day lows and it witnessed some selling in the first half of trading action on Tuesday. The latest optimism over President Trump’s return to the White House after a 3-day hospital stay as a result of COVID-19 is a major factor undermining haven assets like gold.
Furthermore, a modest US dollar rebound from the daily lows put some more pressure on the dollar-denominated commodity. The dollar got some significant support from reviving hopes that the US lawmakers might be close to a compromise over the next coronavirus relief package.
Hopes for a bipartisan United States economic relief package grew tremendously as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin met on October 5. The legislators spoke via phone on Monday for more than an hour. They are now prepared to talk again on Tuesday working in a concerted effort to reach a viable compromise on legislation.
Traders Invest Cautiously
Despite all these positive developments, investors remain cautious on the back of the political uncertainty ahead of the forthcoming US Presidential elections scheduled for November 13. That was quite evident from a softer tone surrounding the US equity futures coupled with a pullback in the US treasury bond yields. That helped to limit any further losses for the non-yielding gold.
Traders, analysts, and investors might also strive to refrain from placing any significantly aggressive bets ahead of the Fed Chair Jerome Powell’s scheduled speech that will happen later during the North American session.
Therefore, it is wise to wait for some considerable follow-through selling before positioning for any more depreciating move amid absent critical market-moving economic releases.
The nearest support has formed near the $1,900 level and is followed closely by the overnight swing lows consolidating around the $1887 region. If these support levels do not hold, XAU/USD may plunge further to test the $1862 horizontal zone with some intermediate support formed near the $1880 zone.
On the other hand, the $1,918 region is the immediate resistance for the precious metal. Above that zone, the commodity is probably going to rise to the $1928 strong support breakpoint. If strong enough, the momentum might extend towards a multi-week-old descending trend-line hurdle that has formed near the $1,936 area.