Gold prices are digesting losses after Tuesday’s sharp selloff. That seemed to be inspired by an updated set of global economic growth projections from the IMF. While the fund moderated the depth of the recession it envisions in 2020, the vigor of the recovery in 2021 was pointedly downgraded, registering 0.2 percent lower for worldwide GDP growth.
That weighed on market-wide risk appetite. Traders have almost certainly priced in the idea that global growth in 2020 will be generally abysmal at this point, and with the calendar well into October are probably looking ahead toward what is likely to happen beyond the remainder of the fourth quarter. Stocks edged down and haven demand buoyed the US Dollar, weighing on anti-fiat gold by extension.
GOLD PRICES MAY RISE AS TRUMP, BIDEN TALK UP STIMULUS
The US presidential election may retake the spotlight in the day ahead. Democratic challenger Joe Biden will take questions at a town hall event while Republican incumbent Donald Trump will hold a rally.
The gatherings are in lieu of a debate between the two candidates, which was called off because Mr Trump refused to participate after organizers adopted a virtual format due to his recent Covid-19 infection.
A key topic of discussion is likely to be the need for additional fiscal stimulus after key parts of the government’s initial relief effort countering the pandemic’s economic impact lapsed.
Negotiations on a package appear deadlocked despite Mr Trump’s about-face decision to re-engage in talks after abruptly cancelling them just days before.
Biden and Trump seem to concur that further stimulus is needed, but find plenty of room for disagreement on its size and the spending priorities therein.
Nevertheless, comments that suggest some sort of policy support is in train regardless of who prevails in the November 3 presidential election may ease traders’ anxiety and stoke risk appetite. This might pull the Greenback lower and lift gold as a consequence.
GOLD TECHNICAL ANALYSIS
Gold prices retreated from resistance defining the downtrend since mid-August. Support is in the 1848.66-63.27 area, with a daily close below that threatening a decline below $1800/oz. Alternatively, a daily close above the outer layer of resistance at 1934.00 puts the $2000/oz figure back into the crosshairs.
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