We believe this is just a correction to the strong gains made in the late summer through to end of September and not the beginning of a more protracted corrective phase.
We expected the gold price to rise at the end of October after seeing support at $1700 on the 24th and 26th Oct – but then Superstorm Sandy rocked up and blew away all hopes as she shut down Wall Street for a few days and left many US traders with more important things to worry about.
The thin-volume trading caused by Sandy literally took the wind out of the market – once the early part of the week had effectively been “cancelled”, traders took to the sidelines to await the non-farm payroll data on Friday…and at one point it even looked like that would be delayed meaning there would have been no fresh impetus for traders.
This week sees the US Presidential Elections on Tuesday – a win
for Obama is likely to have a positive impact on the gold price, whereas a win for Romney will have the opposite effect as he is less likely to continue with the current fiscal stimulus arrangements having stated a need for change within the Fed.
Later in the week we’ve got the interest rate decisions and subsequent press releases from the Bank of England and ECB, with a key vote happening in Greece on Wednesday regarding their ability and commitment to meet the austerity demands set out in their bailout package - as always (it seems these days), Europe continues to cause uncertainty across the globe.
Gold should see support at $1668, $1660 and $1630; with key resistance levels at $1695-$1700 and $1715-$1720.