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(Kitco News) – On what was a wild morning, gold prices fell nearly $ 100 on Monday, but so far, maintaining critical support levels after Pfizer and BioNTech announced a potential vaccine for the COVID virus. 19.
However, some analysts warn that the selling pressure appears to be excessive as there is a lot of uncertainty and liquidity in the market to support the precious metal. December gold futures were last trading at $ 1,855.60 an ounce, down 5% on the day.
Robin Bhar, an independent commodities analyst, said that while the latest stocks are bad for gold, there are still plenty of investors donating ‘I don’t know the potential vaccine. He added that investors should wait for the dust to settle before making major changes to their gold investment.
“When the dust settles, I think I still want to buy gold on dips, ”he said. “There is still a long way to go before a vaccine is accessible to everyone. When everyone can get a vaccine, maybe that’s when you want to sell gold. “
Bhar added that the next 24 hours would be crucial for the gold market to see if prices can maintain critical support levels. So far, gold has managed to hold support in September ‘s low above $ 1,850. Bhar added that the next major support area he is looking at is around the 200-day moving average at $ 1,794 per ounce.
Ole Hansen, head of commodities strategy at Saxo Bank, said he also remains optimistic about gold in the short term, as he predicts it will take a while for the vaccine to be available to the public.
“The virus could go away, but it doesn’t ‘It means that economic growth will turn on a dime, “he said. “Much damage has been done that can ‘It won’t be fixed easily or it will take a long time. “
Hansen added that he is not surprised that gold is seeing significant selling pressure on the vaccine announcement. He added that the news reduced the chances of governments injecting more stimulus into financial markets.
“Basically, we are seeing a slowdown in the trade that we have accumulated over the past six months, “he said. “But there is still a lot of uncertainty to support gold ‘s new regime. A vaccine is good news, but it’s not ‘t change the narrative. “
Although there are shifting expectations of new stimulus measures, Hansen said the global economy still has to contend with the trillions of dollars that were pumped into financial markets in the spring.
Analysts and economists have noted that it took the Federal Reserve nearly a decade to undo, with little success, the stimulus measures introduced during the 2008 financial crisis.
“The reality is that interest rates have won ‘It won’t be climbed anytime soon, and that will continue to be good for gold, ”Hansen said. “If we see the global economy recover rapidly, then there is a possibility that inflation is supercharged and could lead to significantly negative real interest rates. “
Looking at gold ‘s technical picture, while the precious metal has experienced significant selling pressure, it has not hurt gold ‘s long-term prospects, said Jim Wyckoff, senior technical analyst at Kitco.com.
“The bulls should defend strong technical support at the September low of $ 1,851.00. A drop below that price level would inflict severe damage to the chart in the short term, suggesting a new down leg in prices, ”he said in a report released Monday.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and / or damage resulting from the use of this publication.
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