PRICE OF GOLD KEY POINTS
Gold prices continue tracking the October’s opening range amidst continued talks for an extra round of the US fiscal stimulus, and the key market trend might keep the gold afloat as Federal Reserve officials retain the dovish forward guidance of the fiscal policy.
PRICE OF GOLD TRACKS THE MONTHLY RANGE AS THE FEDERAL RESERVE HIGHLIGHTS OUTCOME BASED GUIDANCE
A closer look at the developments originating from the united states might affect the prices of gold, Drew Hammill, House Speaker Nancy Pelosi’s Deputy Chief of Staff, tweeted that Treasury Secretary Steven Mnuchin and the Speaker are moving with talks scheduled to continue tomorrow.
Another monetary stimulus package might keep the FOMC (Federal Open Market Committee) on the sides as Richard Clarida, the Fed Vice-Chair, emphasized that the committee already made some crucial changes to the policy statement that upgraded their forward guidance regarding the future outlook of the federal cash rate.
Most recently, the Vice-Chair highlighted the outcome-based forward guidance for the fiscal policy with the FOMC authorities expecting it to be suitable to maintain the existing 0% to 0.25% target range for the federal cash rate until the conditions of the labor market reach levels that are consistent with the committee’s evaluation of maximum jobless until the inflation rises to 2%, and until the inflation is on the right track to moderately surpass 2% for some time.
On the other hand, Clarida warned that extra support fiscal and likely monetary policy would be required for the economy of the US to return to the conditions before the pandemic, and the existing market trends might continue persisting of the scheduled FOMC rate decision on November 5 as the US central bank vows to increase our agency mortgage-backed securities and Treasury securities as Crude Oil Prices Test Chart Resistance After China Economic Report.
Gold Price Daily Chart
Essentially, the key themes that result from the coronavirus pandemic might be carried forward into the end of October as the Federal Reserve balance sheet approach the peak from June, and the gold price might continue reflecting the inverse relationship with a reserve currency as a net long USD preference since early 2020.
The IGCS data continue showing the crowd trend in the US Dollar, as investors are net-long USD/JPY, USD/CAD, and the USD/CHF whereas the crowd is still net short the EUR/USD, NZD/USD, and GBP/USD. Nevertheless, the Aussie dollar continues bucking the trends with 56.12% of investors are currently net long the AUD/USD in comparison to 50.40% from early this week.
However, the low-interest setting alongside the swelling Federal Reserve balance sheets might continue to improve the gold appeal as an option to the fiat currencies. Also, it’s yet to be seen whether the drop from $2075, the record high will turn out to be a change in the market trends.