This website uses cookies to provide you with full functionality and the best possible user experience. By continuing to use this website you agree to our cookies policy. Find out more. Close

US Presidential Debate Moves Unwind; Gold Coiling for Breakout

by Fawad Razaqzada

The market’s initial response to the US presidential election debate on Monday night was a clear sigh of relief. The Mexican Peso, which had hit a record low against the dollar just the day before, surged higher, as too did the Canadian dollar, Japanese Yen and global stock index futures. However most of those moves quickly reversed by Tuesday morning as traders were quick to take profit, knowing full well that a TV debate may not necessarily impact the outcome of the actual votes in a meaningful way, especially those of the die-hard supporters of Trump and Clinton.

In addition, rising concerns about Deutsche Bank continue to undermine the financial sector across Europe. Here, the equity markets turned lower on Tuesday after a slightly firmer open with the DAX dropping 1%. Added to these concerns, hopes that a deal among oil producers to freeze their output is fading fast. Both Iran and Saudi oil ministers have suggested that this week’s discussions in Algeria were aimed at building consensus for a deal which could potentially be signed later on in the year. Iran is pushing for more market share as it tries to reach its pre-sanction levels while Saudi is willing to cut its output now, knowing that it has probably reached peak capacity and ahead of lower seasonal demand in the final months of the year.

Despite Tuesday’s sell-off in the stock markets amid the above-mentioned concerns, gold was struggling to find safe haven demand. The yellow precious metal was let down by a small rebound in the dollar which gained ground against the euro, Swiss franc and the Canadian dollar.

Nevertheless, the bullish trend remains intact for gold. At the time of this writing, the metal was hovering around its 50-day moving average and short-term support near $1332. From here, gold could obviously bounce back to test the short-term bearish trend line again, or alternatively drop to the rising trend line once again. A potential test and break of the short-term bearish trend line around the $1343 area could pave the way for a rally towards the top of the recent range at $1375 and potentially beyond. Conversely, a potential break below the rising trend line could lead to a significant sell-off. Traders may therefore wish to keep their stops relatively tight as they don’t want to get caught offside in a potentially sharp move. Alternatively, they may wish to wait for gold to make a move before opening a position in the direction of the breakout.

fawad-razaqzada-gold-2016-09-27

From time to time, GAIN Capital UK Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

Don't have an account?

Open a trading account with us and start trading forex.

Create an account

Got some trading ideas?

Make the most of any trading opportunity

Log in and Trade

Contact us: