Week 41: Market update & Gold trading plan

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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Market update:

Overview: Global equity market was most recently seen driven by fresh concerns surrounding the US election after President Donald Trump was tested positive for Covid-19. This comes after Democratic nominee Joe Biden widened the lead in polls with President Trump as we look to markets remain US election sensitive going into the fresh week.

Items to note

· President Donald Trump and First Lady Melania Trump had most recently been tested positive for Covid-19, denting risk sentiment in the immediate aftermath of the announcement. Although President Trump may be considered the high-risk group for Covid-19, it is reported that he is ‘well’ according to his doctor so it remains to be seen how long this disruption will be for his campaign and markets.

· US vice presidential debate will be next on the calendar, currently expected to be held on Wednesday, October 7, 9am eastern (Thursday, 9am SGT). It is uncertain if the October 15 second presidential debate will continue given President Donald Trump’s Covid-19 positive test and there are some talks about Mike Pence being the expected candidate to step up if President Donald Trump’s conditions should worsen to any extent in which he is unable to take the stage. Quite a lot to watch on policies as well through the vice presidential debate assuming no changes here.

· China holidays continue till Thursday, Oct 8, with the return on Friday coinciding with the September Caixin services PMI release in the morning. It will be one watching the market reaction after all the US election matters prior to which with the data unlikely to significantly move market after having seen strong figures in the official readings.

· FOMC minutes from the September meeting will be released on Wednesday in the US. The meeting had marked the first since a change to their forward guidance under the new average inflation targeting regime while the Fed had also revised up their forecasts. One to track for the range of views here, particularly with regards to the specifics. In the week, a series of Fed members including Fed chair Jerome Powell will also be speaking.

· Brexit crunch time is noted with the final rounds of talks now over while PM Boris Johnson is expected to hold further conversations with European Commission President Ursula von der Leyen over the weekend that had been seen as positive. GBP/USD inched higher with the news, one to watch into the fresh week.

· RBA monetary policy meeting will be held Tuesday with consensus pointing to no change in monetary policy on Tuesday, although expectations remain that the central bank could further cut rates into the November meeting to a record low. Federal budget will be due on the same day.

· OPEC World Oil Outlook report will be released on Thursday amid declining oil prices on the back of oversupply concerns. US oil inventory report will be due prior on Wednesday, ones to watch as Brent Crude oil dip past $40/bbl.

· Singapore’s advance Q3 GDP may be released any time between October 7-14 alongside the MAS monetary policy decision, thought the exact date is yet to be announced.

 

 

Gold trading plan:

Weekly Chart:
We can see that on the immediate term basis, Gold is supported at ~1,848 and with the Thursday’s news of Trump tested positive for Covid-19 has caused USD and Gold to undergo a wide wigsaw where it first became very Bullish and subsequently gave back the gains to neutral to back test the support.
From the current chart, we can see a trend emerging where Gold’s current support is on the 1880-1890 range.
Should gold be able to go above 1,921 – the upside momentum would be stronger.

 

Daily Chart:
From the daily chart, we can see that Gold is currently in the midst of recovery where there is a probability for MACD to cross over on Monday/Tuesday.
It would be important to monitor if Gold can break above 1,921 as that would be a good early indication for the Bull to be back.
Should Gold fail to go above 1,921 where the MACD fail to crossover, we would be expecting another deeper sell off to happen.
4 hours chart:
Gold is currently very close to the support of the recovery trend. In case it bounces off the support line, the likelihood of it going up to 1,920 range would be high and if case if the trend is broken, it would be heading to the range of 1,880 – 1,890. Anything below 1,880 would mean that Gold would go down deeper.
As no trading/investments are guarantee sure win, please do your own due diligence and always look at risk to reward and trade with guaranteed stop loss (private message me to know more).

Past article written on how to use guaranteed stop loss; do private message me in Telegram for me to refer you to IG.

Regards,

Ernest Koh