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09 October 2020

Gold gains as easing dollar, U.S. stimulus hopes bolster appeal

Gold prices rose 1% on Friday, supported by a weaker dollar and optimism over a new U.S. coronavirus relief package after President Donald Trump said talks with Congress had restarted.

Spot gold gained 0.9% to $1,910.96 per ounce by 0310 GMT. It was up 0.7% for the week. U.S. gold futures were up 1.2% at $1,916.90.

The dollar index, which was down 0.2% against its rivals, was headed for a second straight weekly fall.

Renewed hopes for another fiscal stimulus pulled the dollar lower and raised expectations of a pick-up in inflation, said Howie Lee, an economist at OCBC Bank.

“The $1,900-level is a sticky one and, in my opinion, gold is going to trade around this level until the (U.S.) presidential elections,” Lee said.

In an interview, Trump said there was a good chance a deal over Covid-19 relief could be reached, but gave no details of such a pact.

Gold, widely viewed as a hedge against inflation and currency debasement, has surged nearly 26% this year, boosted by unprecedented stimulus from governments and major central banks to cushion the pandemic’s economic impact.

“We expect gold prices to continue to gather strength as market volatility rises with the November U.S. presidential elections fast approaching, albeit with ebbs and flows,” Fitch Solutions said in a note.

Silver rose 2.1% to $24.33 per ounce and was up 2.6% for the week. Platinum was up 1.3% at $873.65 and palladium was 0.3% higher at $2,380.36.

Gold Price Analysis: XAU/USD recaptures $1900 on US stimulus hopes, eyes on $1928 cap – Confluence Detector

Gold: Key resistances and supports

The Technical Confluences Indicator shows that Gold is looking to extend the bullish momentum above the critical barrier at $1910, the previous low on one-hour.

Acceptance above the latter will expose the next upside target at $1918, which is the confluence of the previous week high and Bollinger Band four-hour Upper.

Further north, the focus remains on the next significant cap aligned at $1928, where the pivot point one-week R1 lies.

On the flip side, strong support awaits at $1904, the Fibonacci 38.2% one-month, a break below which could expose the $1900 support area.

Sellers would then target the critical cushion around $1895, the meeting point of a cluster of healthy support levels, including the Fibonacci 23.6% one-day, SMA50 four-hour and SMA200 one-hour.

The last line of support for the XAU bulls is seen at $1892, which is the convergence of Fibonacci 38.2% one-week, SMA50 one-hour and SMA10 four-hour.

USD/CHF Price Analysis: Bears will have a tough time above 0.9125

USD/CHF drops to 0.9154, down 0.17% intraday, during the pre-European session on Friday. In doing so, the quote prices a three-day losing streak.

While the pair’s failures to cross the immediate upside hurdle near the 0.9200 round-figure favors the sellers, a confluence of 50-day SMA and an upward sloping trend line from September 01, around 0.9135 becomes a tough nut to crack for the USD/CHF bears.

Also acting as strong support is a 14-week-long falling trend line, at 0.9125 now, that used to act as a key resistance line before September 23.

Furthermore, the 0.9100 threshold, the mid-September low near 0.9058 and August month’s bottom surrounding 0.8998 are extra downside levels that challenge the USD/CHF south-run.

On the flip side, a clear break above the 0.9200 mark will help the pair to attack the August month’s peak close to 0.9240/45. Though, USD/CHF bulls will remain worries unless witnessing a daily close past the previous month’s top near .9300.

USD/JPY Price Analysis: Bulls can ignore pullback from 14-week-old resistance line

USD/JPY trims early-Asia losses while rising to 105.90 ahead of Friday’s European session. The yen pair took a U-turn from a multi-day-old resistance line the previous day. However, the resulted declines stay above 50-day SMA support amid bullish MACD.

As a result, buyers are waiting for entries and will not hesitate to refresh the monthly high of 106.10 if witnessing an upside clearance of 106.05 trend line resistance.

In doing so, the USD/JPY bulls will eye the August month’s peak surrounding 107.05 whereas the last month’s top of 106.55 can offer an intermediate halt during the rise.

Meanwhile, a downside break below the 50-day SMA level of 105.80 will have an opportunity to bounce from an upward sloping trend line from September 21, at 105.47 now.

In a case where the bears sneak around 105.45, the monthly low close to 104.95 and the September month’s trough of 104.00 will be in the spotlight.

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