Is gold price in a zero-sum game? Here's the catalyst needed to go higher

Is the gold market stuck in a zero-sum game as the positive vaccine news is balanced out by high levels of anxiety due to the surging coronavirus cases?

"Investors continue to reassess the risk of stricter containment measures against the optimistic prospects of a vaccine," said ING strategists. "This dichotomy may prove to be a zero-sum game for markets at the moment, and we could see risk sentiment face further stabilization as we head into Thursday's Thanksgiving holiday in the U.S."

This week saw massive gold-backed ETF outflows, which weighed on the precious metal. But the market held its ground at the critical $1,850 an ounce level and managed to end the week on a slightly more positive note, with December futures last trading $1,872.30, up 0.58% on the day.

"Gold prices have been under pressure since the positive vaccine announcement on Nov. 9, but prices have found support on dips below $1,865/oz, at least for now," said Standard Chartered precious metals analyst Suki Cooper.

However, Friday's upside in gold should be taken with a grain of salt as it represents short-covering ahead of the weekend, said Kitco Metals global trading director Peter Hug.

"Today's move to the upside is just a pattern, covering short positions. People don't want to be short on the weekend. Selling usually starts on Monday," Hug noted.

Nevertheless, Hug said that he'd rather be long-gold next week than short-gold. But he warned that trading will be thin next week due to the Thanksgiving holiday, and investors must brace for extreme volatility. "When you have a thin market, you can get a lot of volatility," Hug said.

A similar view was expressed by Afshin Nabavi, senior vice president at precious metals trader MKS SA. "There's more potential on the upside than downside next week," Nabavi said.

Another week has gone by with gold stuck in a range between $1,850 and $1,900. "It's been a hectic week, but at the end of the day, we haven't come out of the trading range. Next week's range remains at $1,850-$1,900," Nabavi noted.

And, according to analysts, the precious metal currently lacks a catalyst strong enough to take it higher or lower.

The biggest and most likely driver that could push gold back above the $2,000 level is stimulus, said Hug. "The market is still waiting for a catalyst. From technical support, $1,850 is still showing resilient support. Catalyst will be a stimulus, and it might not come until January."
 

Biggest risk to gold: pace of ETP redemptions

Until more stimulus is introduced, the most significant risk to gold is the pace of the gold-backed exchange-traded-products (ETP) outflows, warned Cooper.

"Biggest risk for gold prices is the pace of ETP net redemptions, one of our key watch factors. Previous corrections have seen modest net outflows of 20 tonnes. Still, outflows have already exceeded 50 tonnes for the month, on track to be weakest since April 2019," she said on Friday.

As coronavirus cases rise at record levels, government shutdowns could add to people's impulse to jump out of gold and into cash, noted Hug. "When you get that type of uncertainty, human nature is to move into cash. That's why you are seeing liquidation in some of the metal positionings," he added.

More shutdowns in the U.S. could help get stimulus out faster. Still, the additional damage they create could be dangerous for the economy, warned ING economists.

"With Covid cases on the rise across the U.S., we are seeing more states announce new containment measures. In the likes of Michigan, Wisconsin and California, we have seen dine-in restaurants/bars, gyms and places of worship forced to close while other states have introduced curfews/stay at home orders," the economists said. "These measures are likely to spread to other states but may not be enough to limit the latest wave of the virus if evidence from Europe is anything to go by. Rising hospitalization rates after next week's Thanksgiving holiday, historically a time for family gatherings, could hasten more aggressive measures, which would be more economically damaging."

Investors who got into gold and silver in March still have about a $300 and a $10 profit, respectively. "As markets consolidate and don't break out, people start to get impatient and tend to take money off the table," Hug pointed out. "Equity market is still holding. So, many are putting money into bonds for safety; some are rotating into the equity market."

RJO Futures senior commodities broker Daniel Pavilonis added that he also does not see gold breaking out until there is "a firm commitment to getting sizeable stimulus."
 

The long gold trade still intact

Those investors who'd like to be long gold, at least in the medium term, continue to see price dips below $1,860 an ounce as opportunities to buy, said Cooper.

Hug also noted that any weakness in the gold market is an opportunity to add to positions for medium and long-term investors.

There is still a chance that gold could drop to $1,820 an ounce next week, said Walsh Trading co-director John Weyer. "We could still see it break down to $1,820. After that, I'd be looking it a longer play in gold. In January-February, we could see an upward move above $2,000. We need something that breaks us out of thins range," Weyer said.
 

Mnuchin vs. Powell

Markets were also digesting the disagreement between U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell.

Mnuchin wrote to the Fed on Thursday, asking to return "the unused funds to the Treasury." This means that the key pandemic lending programs that the Federal Reserve uses to support businesses, nonprofits and local governments would expire on Dec. 31. In response, the Fed issued a statement, saying that the "full suite" of measures needs to be maintained.

This could potentially hurt the equity markets in the short-term, said Hug.

"You've got Powell saying they are doing as much as they can and the economy needs fiscal stimulus until the vaccine can do its job. Now, you've got Mnuchin coming out and wanting the money back. It appears that the Trump administration is putting as many roadblocks as possible into Biden's way," he said. "This makes markets nervous. The first crack is going to be the equity market and then, depending on the extent of that crack, the short-term effect could be negative for gold."
 

Data to watch

Despite being a short week due to the holidays, the U.S. will see a slate of data, including FOMC meeting minutes from the November meeting and the updated Q3 GDP data on Wednesday.

Other important figures to keep an eye on are the CB consumer confidence on Tuesday, as well as jobless claims, PCE price index, and durable goods orders on Wednesday.

Also, markets will be tracking the Black Friday sales figures to gauge consumer spending during the raging pandemic.

 

By Anna Golubova

For Kitco News

Kinesis Money

David

Sentiment is mixed leading into the EU session

Gold and silver are once again under pressure leading into the EU session. In the yellow metal, the stubborn consolidation low of $1848.84 is still holding but it seems vulnerable to a downside break. Silver also has a support level at a technical trend line but also the $24 psychological level is holding up the price this morning.

Late yesterday and overnight much of the talk has been over the feud between the US treasury and the Federal Reserve. US treasury secretary Mnuchin asked Jerome Powell to return funding for several Fed lending programs that rely on Treasury’s backing. Within minutes Powell and Co. issued their own statement urging that “the full suite” of facilities be kept in place. Recently the Fed has been asking Capitol Hill for help in supporting the economy but for one reason or another, the fiscal support just has not come.

In the backdrop of rising US COVID-19 cases and deaths, Pfizer is expected to file FDA application for coronavirus vaccine on Friday. Elsewhere, the World Health Organization has recommended against using Gilead Sciences’s remdesivir to treat hospitalized patients. There has been a positive coronavirus story overnight as UK heath secretary Hancock said there are encouraging signs that virus cases are starting to flatten in the UK.

Sticking with the UK and we are getting closer and closer to the Brexit deadline with no real resolution. All the talk of contingency plans has dampened the mood in the sterling rally. There are bound to be more Brexit headlines in the session as EU ambassadors are set to be briefed on latest Brexit updates this morning.

The sentiment leading into the EU open is mixed the Nikkei 225 (-0.42%) and ASX (-0.12%) both closed lower but the Shanghai Composite had a decent session closing 0.44% in the black. Base metals are mostly higher with only tin remaining under flat. Lead, platinum, copper and zinc are all treading above 1% higher in early trade.

Looking ahead to the rest of the session highlight include Canadian retail sales and comments from ECB President Lagarde, FOMC Member Kaplan and German Buba President Weidmann.
 

By Rajan Dhall

For Kitco News
 

Kinesis Money

David

Gold price ‘death cross’ – sharp drop signals are flashing warns Gary Wagner

The 100-day and 50-day moving averages for gold have just crossed following months of a consistent differential, and this pattern is indicative of a "sharp drop" down in the gold price, said Gary Wagner, editor of the GoldForecast.com.

“When the short term [average] moves below a longer term chart, it forms an X just like the Skull and Bones,” Wagner said. “Towards December of last year into January of this year, we had an inversion, an inversion meaning that we had the longer term moving average above the shorter term.”

The cross signals a sharp drop in pricing.

Wagner said that the next support level is at $1,845 an ounce.

“The major reason we’re seeing weakness in gold recently is that traders have been anticipating an additional fiscal stimulus bill to be passed by Congress, Senate, and the Administration. Of course, that hasn’t happened, and that has what has pushed pressure on gold.”

 

By David Lin

For Kitco News

 

Kinesis Money

David

Gold fund manager 'fully invested'; inflation, geopolitical risks to remain

The gold market is experiencing a crosswind of economic forces, but the main tailwinds of inflation and geopolitical risks are still intact, said Sean Fieler, CIO of Equinox Partners.

“I don’t think the Republicans are going to be aggressively in the business of cutting spending, they weren’t under the Trump Administration, I think it’s going to be hard to position themselves that way in a Biden Administration. On the other reason they would put through tax increases. With the Fed monetizing the deficits no matter how large they are, why Republicans would go along with tax increases, is difficult to fathom for me,” he said.

Geopolitical risks are expected to remain high during a Biden Administration, Fieler said.

“I think we’ll see that a Biden Administration will be significantly more hawkish than what we saw from the Trump Administration,” he said.

On inflation, the Federal Reserve’s underestimating rising prices is a mistake, Fieler said.

“They’re just not that concerned about inflation and they are very concerned about unemployment,” he said.

 

By David Lin

For Kitco News

Kinesis Money

David

Miners are taking advantage of higher gold price, more projects kicking off in Q4 – Metso Outotec

Mining companies are taking advantage of higher gold prices this year, especially when it comes to silver and gold projects, according to Metso Outotec.

More new projects are starting to take off in Q4, Metso Outotec's President of North and Central America Giuseppe Campanelli and VP of metals sales for North and Central America Tim Robinson told Kitco News.

"Our customers, especially on the gold and silver side, are looking to ramp up as fast as they can. They want to take advantage of the fact that gold prices are high. Maybe smaller projects are faster to execute and get into operation. That seems to be a little bit of a trend," Campanelli said.

Throughout the COVID-19 crisis, miners have managed to maintain production level while following through on new social distancing measures.

"Our customers are doing a fantastic job of managing COVID as best they can, maintaining production levels, trying to ensure that their operations are ongoing by social distancing, and securing their supply chain," Campanelli said. "They're turning profit and I think we have a very strong role to play to help them."

The coronavirus crisis has created a lot of uncertainty globally, Campanelli stated, adding that precious metals prices have benefited greatly from that uncertainty.

"Gold is a hedge against uncertainty. So gold prices skyrocketed, silver prices as well. The precious metals are benefiting from that quite heavily," he said. "But we're also seeing lofty commodity prices for base metals. Copper prices are fairly strong as well as iron ore. This is great for our customers and we have been supporting them as they ramp up production to take advantage of the spike. There are many interesting projects on the go at the moment."

Initially, COVID has triggered a delay in financing but the actual work has never stopped, Robinson highlighted.

"COVID did affect some of the gold projects with regards to financing, where the banks couldn't visit the sites however, this did not stop the preparation work for these projects," he said. "It did delay projects being executed this year but we are seeing some movement in Q4 and that's all really positive and bodes well for 2021.

Social distancing and remote monitoring

Social distancing was one new major change that needed to be introduced at mine sites this year, which has successfully been implemented, Campanelli said.

"Our customers are limiting heavily who can go to site. They're trying to social distance and run their operations," he noted. "That changed significantly how we interact with our customer. We've moved through virtual communication. There's only so much you can do virtually. They still have a need for our services and people are going there to help them, but it's limited and on the need-to-go basis."

Digital solutions and remote monitoring have become very popular this year, helping the mining industry deal with the current coronavirus situation, Campanelli pointed out.

"We've been further developing our virtual communication channels to perform remote inspections and support them remotely. We have remote monitoring centers that we call Performance Centers, in Santiago, Chile and Changsha, China," he said.

This was already a trend already pre-COVID, Campanelli added. "It's becoming increasingly difficult for our customers to operate their sites. As ore grades decline, mines are more remote and are deeper in the ground … Our equipment is digitalized meaning, we can extract information on equipment and process performance."

The data received is then used to project what's going to happen next and advise what adjustments could be made.

Outlook on mining

The outlook for the mining industry remains positive going forward, especially when it comes to gold and precious metals throughout North and Central America, Robinson added.

"We're quite busy with the initial phases of projects, in particular, gold projects. In terms of that, they haven't stopped, they're preparing for execution. That's really positive," he described.

On the base-metal side of things, there were more delays this year because base metals projects have larger scale and larger capital because of the tonnage that goes through the plant, Robinson pointed out.

"It's a little bit different on the base metals side," he said. "The capital that's required for some of the larger base metals projects is more significant than gold. The difference between this year and the years before is that we've seen good prices on gold and good prices on copper and everybody's excited about that, but it's delayed decision-making."

Going forward, gold does not need to maintain its new highs in order for most of the projects to make money, Robinson said. "Gold projects haven't been based on $1,900 per ounce gold. They've been justified on earlier prices. We are confident on these projects being executed net year," he noted.

There is also a lot of innovation happening in the mining space. Robinson highlighted energy comminution technology, tailings management, EV battery material processing technology, sustainable metals recycling and BIOX technologies.

"BIOX technologies, for example, is biological leaching of refractory oars. It's been around for some time, but not necessarily in this region. We've got operations using this technology in Africa, in Australia, and in central Asia. But there's a lot of interest in the technology in North America," Robinson said.

Merger news

According to its website: "Metso Outotec is a frontrunner in sustainable technologies, end-to-end solutions and services for the minerals processing, aggregates, metals refining and recycling industries globally."

This summer, Metso and Outotec completed their merger, which has created "a truly end-to-end portfolio of solutions covering a more significant part of the customer's flow sheet," said Campanelli.

The merger has also allowed Metso Outotec to take on more complex challenges and more risks.

"Now, we have the ability to deliver a much larger scope. We can be more responsible for what's being fed into the equipment and how it's processed later on," Campanelli described. "From the services side … we take on more of the responsibility and really help our customers optimize their plants, optimize their downtime, and the reliability of their equipment."

 

By Anna Golubova

For Kitco News

 

Kinesis Money

David

A 'sober' 2021 gold price target; say goodbye to 'phenomenal' drivers – HSBC's Jim Steel

2020 has seen a “phenomenal” inflow of gold-backed exchange-traded funds, fueling an investment-led rally, but while ETF inflows are still expected to be strong, 2020’s level of inflows would be hard to keep up.

Jim Steel, chief precious metals analyst at HSBC, said that gold will average a price of $1,965 an ounce in 2021, owing to competing macroeconomic forces; accommodative monetary policy will continue to provide tailwinds, but an unwinding of geopolitical risk from a Biden Administration will ease the appetite for gold.

“Gold is sensitive to geopolitical risk,” he said. “If we’re going to get some rapprochement on the trade issues between the United States and the other countries, and it’s not just one country, it could be from several, and we also get a charm offensive from the Biden Administration to U.S. allies or to others, and the geopolitical risks come down and there’s progress made on the trade front, then that would be negative for gold.”

Steel stressed that the forecast of $1,965 an ounce is an average price target, not a year-end target.

“We’re looking for strength in the more early part of the year and maybe more moderation in the second part, but don’t forget that’s an average, which means that the market will likely spend time about $2,000 for some time, and some time under $1,900,” he said.

The gold market’s rally this year has benefited from the global phenomenon of monetary stimulus and low interest rates.

“Most gold rallies are supported by two features: debt and liquidity and some varying degrees of one, the other, or both. Right now, the gold market is the beneficiary, and has been for quite some time, of both debt and liquidity, and by that I mean we’ve had highly accommodative monetary policies going on for a very long time,” Steel said.

Importantly, low interest rates raises the attractiveness of gold as an asset as it reduces the opportunity cost of holding it, Steel noted.

Seasonality is less important of a factor for the gold price as it used to be, Steel said.

“We used to get movements near Diwali, the Festival of Light in India, and also the Chinese New Year, and you do get some stocking up beforehand, but it’s not nearly as influential as it used to be,” he said.
 

By David Lin

For Kitco News

Kinesis Money

David

These industries to skyrocket in growth from ‘boost in new policies’

The future lies in clean energy and clean transportation, and technology companies surrounding those themes will benefit investors, said Howard Marks, CEO of StartEngine, an equity crowdfunding platform.

“Entrepreneurship is still a very good area for investment, anything to do with technology. I think green technology, which includes solar energy, renewable energy, electric cars, are going to take a big boost from the new policies of the Administration,” Marks said.

While the pandemic has harmed the small-business landscape of the economy, large tech companies have been propelled by the work from home culture.

“The pandemic, in many ways, has accelerated the future, and that acceleration was shown in those stocks, and those of course are the big, large-cap technology stocks,” Marks said.

There has been a record number of new business applications in the U.S., according to data from the U.S. Census Bureau.

“I think a lot of people lost their jobs in the beginning in the pandemic. I think there was a trend to lay off a lot of people, especially from big business, and also from small companies like restaurants. This generated an opportunity for people who are at home to say, should I pursue my dreams today,” Marks said.

Raising capital remains the primary challenge for entrepreneurs.

“Until the Jobs Act, which came out in 2012, entrepreneurs went to venture capitalists, angels, wealthy investors to receive capital, and sometimes friends and family…that was the status quo. With the Jobs Act [came] a new idea of equity crowdfunding where you can actually raise capital directly from a platform like StartEngine, and that is a brand new way, an alternative way to raise capital,” he said.

Marks noted that some of some of the most popular startups today are food and beverages, such as distilleries and breweries, followed by green technology, artificial intelligence, and fintech.

 

By David Lin

For Kitco News

Kinesis Money

David

Gold’s Momentous Rally From 2000 Compared To SPY & QQQ – Part I

We have illustrated the longer-term cycle patterns that originated from an anchor point in 2000 and the real appreciation in Gold compared to other assets.

Chris Vermeulen

Chris Vermeulen

12 hours ago (Nov 13, 2020 05:34 PM GMT)

Gold

My research team and I went off on a wild tangent trying to identify how the markets could react to the recent spike in price activity on Monday, November 9, 2020. This is the day that Pfizer announced a 90% effective rate with its new COVID-19 vaccine, causing the US stock market to skyrocket higher before the opening bell in New York. As with most pop-and-drops, this incredible upside spike trailed lower for the remainder of the trading day. My research team was curious if this type of setup presented any real future outcome or trends. To this end, we focused on the QQQ and the SPY in relationship to Gold.

9 to 9.5 year Gold Depreciation Cycle Ended in 2018 – what’s next?

Gold has been and continues to be a store of value for many around the world. At some times in history, Gold becomes undervalued in comparison to other assets (like stocks, real estate, and other tangible assets). At other times, Gold becomes more highly valued in comparison to other assets. This cycle has taken place throughout hundreds of years of history, and is rooted in the changing perceptions of market participants regarding “what/where is true value in the markets”.

When other assets are skyrocketing higher, Gold is out of favor in terms of real demand. It may still be moving higher in value, but as long as other assets seem to be increasing in value faster than Gold, demand for Gold will diminish. When most other assets enter a time of great concern or devaluation, Gold and Precious Metals usually begin to see stronger demand as the ratio between Gold prices and more traditional investment assets may be near extremes.

Many precious metals investors rely on the Gold to Silver ratio to measure how fast or slow Gold is appreciating or depreciating compared to Silver. This ratio can often be used to help pinpoint disparities between real price valuation levels. In our example, today, we’re using the ratio of the QQQ and SPY to Gold, which asseses more traditional investment asset values in comparison to Gold.

The first Monthly QQQ 2000 Anchor to Gold chart, below, attempts to highlight the past and current ratio levels based on an anchor price level starting on January 1, 2000. The purpose of this ratio chart is to understand how the price advance in the QQQ over time relates to the price advance in Gold. The higher the BLUE ratio level, the more valued QQQ is compared to Gold.

The first thing that caught our attention was the very high valuation levels in early 2000. This suggests that Gold was completely ignored in the late stages of the DOT COM rally when technology and other assets were flying high. As the DOT COM bubble burst, one would expect the ratio to decline over time. However, in this case, the ratio continued to decline over a 9 to 9.5 year period – reaching a low point in 2009 (the Global Financial Crisis lows). This downward trend in the QQQ to Gold 2000 anchor ratio suggests that while the QQQ rotated up and down in a broad sideways trend, Gold continued to appreciate in value. Throughout this time, from 2000 to 2009, Gold rallied over 215% (from $289.50 to over $931.00). This appreciation in Gold translated into the declines in the QQQ to Gold ratio on this chart above.

It was only after 2013 that the QQQ to Gold 2000 anchor chart began to rise again. Interestingly, this really began to take place after the 2011 peak in Gold prices (near $1923.70) and after the US economy really began a more organic growth phase prompted by multiple US Fed QE efforts. We can see from the chart below that the current peak levels (near 0.60) on this ratio chart are still well below the 1.60 ratio levels from 2000. Although this may appear to be a weaker ratio trend, remember this chart anchors everything to January 1, 2000 price points. So this chart reflects the QQQ to Gold ratio based on the origination ratio that existed on January 1, 2000.

COMPARISON OF QQQ, SPY AGAINST GOLD

This next ratio chart below shows the incredible rally in Gold compared to the QQQ and the SPY since the 2000 anchor point. It is important to understand that these ratios are based on the January 1, 2000 anchor price level and represent the comparative price appreciation/depreciation of these assets from that anchor point.

You can see that the QQQ and SPY were both well under the 1.0 ratio level for much of 2001 through 2013. This suggests that these assets failed to rally above the 2000 anchor price level throughout this time. Gold also experienced a brief decline in price below the 1.0 level in early 2000 through 2003, but it quickly started rallying after that point and has continued to extend higher recently.

When we compare the chart below to the one above, we can see that the rally in gold has extended quite a bit further than the rally in the QQQ and the SPY since 2000. Yet, this brings up an interesting question related to the cycles our research team has identified. Have we reached a peak level in the QQQ and SPY in relationship to the appreciation of Gold? Are we entering a new cycle where Gold will continue to appreciate higher compared to the QQQ and the SPY – attempting to recreate a nromalized ratio?

If our research team’s interpretation of this data is correct, the rally in Gold since the 2000 anchor point suggests a new momentum base has established in Gold after the 2011 peak price levels. This new momentum base, if our cycle research is accurate, suggests a broad market peak in equity/stock assets is setting up another 9 to 9.5 year precious metals appreciation cycle that started near 2019. This could be an incredible opportunity for skilled technical traders over the next 8+ years if we understand what to expect based on these cycles/trends.

In this first part of our two-part Gold series this weekend, we have illustrated the longer-term cycle patterns that originated from an anchor point in 2000 and the real appreciation in Gold compared to other assets. In Part II, we will share incredible new information that suggests we are near another 2000-like peak in equities/stocks, suggesting another broad metals rally is just starting and may last another 8+ years.

This does not mean that stocks will collapse or some external event won’t destroy the stock market valuations or the thesis presented. We are merely suggesting that Metals have established a base level (near 2015) while traders have focused on the equities/stocks recently and ignored metals. This rally in stocks/equities suggests that metals have under-appreciated compared to stocks/equities. This disparity in price valuations also suggests that either metals will rally to attempt to close the price disparity or that equities will decline or trade sideways while metals attempt to close the gap.

Overall, this is an incredible longer-term cycle setup that traders must keep in focus over the next few years. If this type of cycle repeats like it did after 2000, then Gold may be trading above $5500 per ounce within the next 2 to 3 years and may peak at levels above $10,000 before the peak is reached.

Learn how my team and I can help you find and execute better trades. We can help grow your trading account with our Swing Trading service, and also protect your investment account with our long-term market signals service. Visit www.TheTechnicalTraders.com today to earn more. If you trade options or are looking to learn more about options trading then please click here to sign up for information on the upcoming launch of our new options courses and our new options signals newsletter service.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen

Chief Market Strategist

Kinesis Money

David

Gold holds steady as virus wave offsets vaccine hopes

Nov 13 (Reuters) – Gold prices were little changed on Friday, as fears of an economic impact due to a surge in global cases of COVID-19 countered optimism from the developments in a potential vaccine.

FUNDAMENTALS

* Spot gold was steady at $1,876.92 per ounce by 0044 GMT. It was headed for its worst weekly performance since late-September, declining 3.8% so far.

* U.S. gold futures were up 0.1% at $1,874.50.

* The dollar index held steady but was on track for a 0.7% weekly gain.

* The heads of the Federal Reserve and the European Central Bank welcomed the encouraging results in trials of a vaccine candidate for COVID-19 but stressed that the economic outlook will remain uncertain.

* The number of Americans filing new claims for unemployment benefits fell to a seven-month low last week, but the pace of decline has slowed and further improvement could be limited by higher infections and lack of additional fiscal stimulus.

* Top Democrats in U.S. Congress urged renewed negotiations over a multitrillion-dollar coronavirus aid proposal, but a top Republican immediately rejected their approach as too expensive.

* European officials warned against COVID-19 complacency and said measures to control a surge in infections must continue.

* More than a dozen U.S. states have doubled their COVID-19 case loads in the last 14 days, compared with the previous two-week period, while the global tally has crossed 52.45 million.

* The London Bullion Market Association is threatening to stop bullion from countries including the United Arab Emirates entering the mainstream market if they fail to meet regulatory standards, a letter seen by Reuters showed.

* Silver rose 0.1% to $24.26 per ounce. Platinum was steady at $879.26, while palladium was 0.2% higher at $2,334.99.

DATA/EVENTS (GMT) 1000 EU GDP Flash Estimate QQ, YY Q3 1500 US U Mich Sentiment Prelim Nov

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)

8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuter

Nov 13 (Reuters) – Gold prices were little changed on Friday, as fears of an economic impact due to a surge in global cases of COVID-19 countered optimism from the developments in a potential vaccine.

Spot gold was steady at $1,876.92 per ounce by 0044 GMT. It was headed for its worst weekly performance since late-September, declining 3.8% so far.

U.S. gold futures were up 0.1% at $1,874.50.

The dollar index held steady but was on track for a 0.7% weekly gain.

The heads of the Federal Reserve and the European Central Bank welcomed the encouraging results in trials of a vaccine candidate for COVID-19 but stressed that the economic outlook will remain uncertain.

The London Bullion Market Association is threatening to stop bullion from countries including the United Arab Emirates entering the mainstream market if they fail to meet regulatory standards, a letter seen by Reuters showed.

Silver rose 0.1% to $24.26 per ounce. Platinum was steady at $879.26, while palladium was 0.2% higher at $2,334.99.

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V) </p> 8780, Outside U.S. +91 80 6749 6131; Reuters Messaging: eileen.soreng.thomsonreuters.com@reuters.net))

 

Kinesis Money

David

Gold continues to drift lower, as traders favor risk-on assets and dollar strength

Gold futures continued to drift lower, continuing the sharp decline that traders witnessed on Monday of this week. Although yesterday gold was able to recover slightly gaining $18 off of Monday sharp selloff, today traders took gold pricing back to erase those advances made on Tuesday. As of 4:55 PM EST, the most active December contract is currently fixed at $1863.50 which is a net decline of $12.90 on the day. Considering that gold futures opened at $1956 on Monday, the cumulative damage over the last three days have been almost $100 decline per ounce.

A combination of strong U.S. equities (risk-on) performance, dollar strength, and modestly higher bond yields have all dampened the bullish market sentiment in the precious metals. Ever since the first week of August when gold futures reached a new record high price at $2088, gold prices have been steadily forming a series of lower highs and occasional lower lows.

The only upside spike since the record high was reached occurred on Monday, November 9, when market forces took gold futures briefly above $1960 per ounce. That price could not be sustained even for a day as market participants aggressively sold gold and silver after Pfizer pharmaceutical announced that they had completed their stage III trials with a 90% efficacy rate.

The announcement took gold $110 lower from the highs achieved to close near the absolute bottom of the range at $1854. The last time gold closed at that particular price point ($1854) occurred on the week of September 5, 2011. Gold it hit its former record high of $1920 roughly 2 weeks before that. The similarity is eerily foreboding to recent action.

Our technical studies indicate that there is strong support for gold at the 38.2% Fibonacci retracement level which occurs at $1844. This retracement uses a data set that begins in the middle of March when gold traded to a low of $1415 up to the new record high which occurred during the first week of August at $2088. Our technical studies also indicate that there is a decent probability that the lows of $1850 will hold and continue to be a major support. However, a break below that price point could take gold to as low as $1768 per ounce which is the 50% retracement from the same data set.

Major resistance continues to be found at the 23.6% retracement level which occurs at $1937. With minor resistance at the 50-day moving average at $1913 and the 100-day moving average which occurs at $1906.

Until some news emerges that clarifies when and how much Fiscal stimulus will be allocated, we could see gold trade in a range between the support and resistance level mentioned above.
 

Wishing you as always, good trading,
 

By Gary Wagner

Contributing to kitco.com

Kinesis Money

David