Trading recommendations
Buy Stop 1290.00. Stop-Loss 1281.00. Objectives 1305.00, 1324.00, 1350.00, 1370.00
Sell Stop 1274.00. Stop-Loss 1285.00. Objectives 1270.00, 1250.00, 1218.00, 1200.00
Overview and Dynamics
Once again there was an advantage in favor of Hillary Clinton in the presidential race in the US, the dollar strengthened in the currency market. After the FBI said there is no new evidence against Clinton in the investigation on the use of private e-mail server to conduct official correspondence, risk appetite increased again. On Monday, there was already the growth of stock indices and the dollar, while the other safe-haven assets like the Japanese yen, gold declined.
The WSJ dollar index, which tracks the US currency against a basket of other currencies on Monday, added 0.5%. A stronger dollar is negative for gold, which in this case becomes more expensive for holders of other currencies, the cost of its acquisition and storage increases. Market participants also believe that Clinton's election victory will increase the chance of the Fed raising interest rates in December. Raising the interest rate is usually a negative impact on the gold price, which does not bring their holders a guaranteed income.
As a result of Monday December gold futures on the COMEX fell 1.9% to 1279.40 dollars per troy ounce. Spot price of gold at the opening of today's trading day at around 1282.00 and the XAU/USD pair is trading within a narrow range.
It is likely that up to the announcement of the first results of the voting in the United States on Wednesday, 9 November, the trading activity in the financial markets will be low.
However, any information, that the gap between Clinton and Trump once again minimal, could once again throw the gold price.
Technical analysis
Since the beginning of the month, the pair XAU/USD rose sharply, breaking through key levels 1270.00 (EMA200 on daily and weekly charts), 1283.00 (EMA144 on the daily chart). On the new FBI data in Clinton messages, the pair XAU/USD jumped to resistance level 1305.00 (upper line of the descending channel on the daily chart, the August lows). With the opening of today's trading day, XAU/USD pair is trading in a narrow range near the support level of 1283.00, above the support level of 1270.00. Given the importance of such fundamental factors as the choice of a new president of the United States, a technical analysis takes a back seat. OsMA and Stochastic indicators show mixed results in different time intervals. However, the positive dynamics of the XAU/USD pair is stored until it is above the level of 1270.00. After the presidential elections in the United States, market participants' attention will switch to the December meeting of the Fed, which is expected, the Fed will raise interest rates. And it will be a strong negative factor for gold prices. In case of breaking the support level of 1270.00 pair XAU/USD will go to the support level of 1218.00 (23.6% Fibonacci level of the correction to the wave decline from October 2012), and in case of breakdown - the lower boundary of the descending channel on the daily chart, passing near the level of 1200.00. Break of the support level of 1218.00 (23.6% Fibonacci level) will create preconditions for the further decrease in pair XAU/USD and return to the downward global trend, which began in October 2012. Alternative scenario implies a breakdown of the nearest resistance level 1305.00 and rising to the resistance level of 1324.00 (38.2% Fibonacci level). In the case of couples break XAU/USD above the levels of 1350.00, 1370.00 to increase the risk of further growth of gold prices to the level of $ 1400.00 per ounce. Such a scenario is likely in case of victory of Donald Trump, as will further economic uncertainty in the US and Fed policy actions in relation to a rate hike in December.
Support levels: 1283.00, 1270.00, 1250.00, 1218.00, 1200.00
Resistance levels: 1305.00, 1324.00, 1350.00, 1370.00, 1385.00, 1400.00
