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Market News How Will Gold Prices React To The Elections(With Trading Strategy)

How Will Gold Prices React To The Elections(With Trading Strategy)

Gold gains as dollar dips in the run-up to U.S. election verdict.

LEO
2020-11-04
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HUANGJIN.jpeg


Gold fell on Wednesday as the dollar strengthened after U.S. President Donald Trump grabbed an early lead in the key state of Florida, muddying the path for his Democratic rival Joe Biden.


Spot gold fell 0.89% to $1892.09 per ounce by 15:45(GMT+8)


"The market is losing confidence in a clear run to a Biden victory at the moment. We have seen the Biden trade unwind, and a big effect of that is that we have seen the dollar strengthen," said IG Markets analyst Kyle Rodda.


Investors were initially limbering up for a win for Biden, who was expected to inject the market with potentially large stimulus measures to help weather the economic fallout from the Covid-19 pandemic.


Analysts at Royal Bank of Canada (RBC) foresee gold, a classic haven asset, resuming the 2020 rally on post-US election turmoil, if any.


Also, traders will be looking to "stimulus legislation, inflationary prices [and] large debts, so gold can resume the upward trend towards $2,000," said George Gero, managing director at RBC Wealth Management, according to Market Watch. 


Traditionally, gold performance does not change based on who is in the White House, with gold returns topping 11% during Democratic presidencies and 10% during GOP presidencies, said Juan Carlos Artigas, head of research at the World Gold Council.


"The political landscape has been increasingly divisive over the past several years — in the U.S. and abroad — and investors are bracing for a potential period of even greater volatility," Artigas said, noting the current "high-risk, low-rate" economic environment will likely prop up gold prices for the foreseeable future.


Gold could be attractive for investors no matter who wins the White House, others argue. If Biden wins, he may push for greater corporate and capital gains taxes, boosting gold's status as an alternative investment, wrote analyst Desmond Leong of AXI Trader.


But if Trump wins, he would likely continue using tariffs, "which could heighten existing geopolitical tensions, resulting in a capital flight to safe-haven assets — such as gold — to ride out the storm," Leong wrote.


At press time, Biden's votes are temporarily ahead of Trump's votes by a small margin.


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Source: Bloomberg


Trading Strategy (source: Trading Central)


Pivot: 1904.00


Our preference: short positions below 1904.00 with targets at 1880.00 & 1871.00 in extension.


Alternative scenario: above 1904.00 look for further upside with 1909.00 & 1916.00 as targets.


Comment: the RSI is bearish and calls for further downside.


Supports and resistances:

1916.00

1909.00

1904.00

1892.00 Last

1880.00

1871.00

1859.00

Guideline for Trading Central strategy 


Trend chart reading guideline


1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days


2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.


3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;


4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.


How to use TC strategy?


1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 


2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.


3. [Alternative scenario] is the plan B for your reference. 


4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 


5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.

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