Gold steadies near highest since November 2011 as virus cases mount
· Gold steadied near a more than eight-year high on Wednesday, as worries over surging COVID-19 cases and hopes of more stimulus measures from the U.S. Federal Reserve lifted demand for the safe-haven metal.
· Spot gold was little changed at $1,792.79 per ounce by 0241 GMT, after hitting its highest since November 2011 at $1,796.93 on Tuesday, just a few dollars away from the key $1,800 level.
· U.S. gold futures eased 0.2% to $1,805.70.
· “The main focus continues to be on the U.S. If the curve continues to steepen and the virus unabated, we are going to break $1,800 just for the fact that the Fed will have to be forced to add more stimulus,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
· The U.S. coronavirus outbreak crossed a grim new milestone of over 3 million confirmed cases as more states reported record numbers of new infections.
· Compounding economic concerns, the European Commission on Tuesday forecast the euro zone would drop deeper into recession this year and rebound less steeply in 2021 than previously thought.
· “The health, financial and economic uncertainties generated by the COVID-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.
· Fed officials expressed concern that the surge in COVID-19 cases threatens to pinch consumer spending and job gains. One Fed policymaker pledged more support ahead from the U.S. central bank.
· Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
· Indicative of sentiment, holdings of SPDR Gold Trust rose 0.7% on Tuesday.
· Weighing on gold, the dollar index rose 0.1%.
· Gold: A break above 1800 is a strong buy signal
Gold – Silver
Gold Spot edges slowly back to very important resistance at 1787/90 & holds. Obviously this is key to direction in severely overbought conditions.
Silver Spot beat first resistance at 18.06/09 hitting targets of 18.21/23 & important resistance at the 1 month high at 18.35/37. We topped exactly here.
Daily Analysis
Gold beat strong resistance at 1778/82 to retest & hold very important resistance at 1787/90. It is worth trying shorts with stops above 1800. A break above 1800 is a strong buy signal despite overbought conditions targeting 1812/14, 1825/27 & 1835/37.
Shorts at 1787/90 target 1780/78 with support at 1772/70. A break lower targets 1767/65 with the best support for today at 1761/59. Longs need stops below 1755. A break below 1755 is a sell signal targeting strong support at 1746/43.
Silver first support at 18.20/18 then best support for today at 18.08/05. Longs need stops below 18.00. A break lower targets 17.87/83 then a buying opportunity at 17.75/65, with stops below 17.60.
We held important resistance at the 1 month high at 18.35/37. Shorts need stops above 18.45. A break higher is a medium term buy signal targeting 18.60/63 & 18.82/85
· Palladium gained 0.3% to $1,921.69 per ounce and platinum was steady at $835.45, while silver lost 0.1% to $18.28.
Reference: CNBC, FXStreet
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