Gold is near weak far strong pattern

COMEX gold prices since the beginning of October has been a weak pattern of volatility.After hitting $1,939 an ounce in mid-October, it fell back. Last week, it broke the support level of $1,900 an ounce and the Shanghai Gold 2012 contract also lost 400 yuan a gram.Gold has now retreated to the lows set in late September.

Multiple negative gold prices weakened

Recently, further spread of the epidemic in Europe and America, Germany and France national blockade measures, European and American stock market and international oil prices fell, while the U.S. economy grew more than expected in the third quarter and risk aversion warming pushed the dollar index to nearly a month to a high of 94, at the same time the United States a new fiscal stimulus plan superposition of expectations the U.S. presidential election uncertainty, multiple bearish, gold prices fell sharply.

For now, the dollar index is a key drag on gold prices.The dollar index rose, reflecting economic differences between the US and Europe, easing expectations from the European Central Bank and safe-haven flows.On Thursday, U.S. GDP rose to an annualized 33.1 percent in the third quarter, a record high, while the number of americans filing new claims for jobless benefits last week was the lowest since mid-March.The euro zone economy came under pressure as Europe again emerged as the epicenter of the epidemic, with its consumer confidence index falling in October for the first time in six months.The euro fell to a four-week high against the dollar after the European Central Bank signalled it would add stimulus measures in December.In addition, against the backdrop of falling European and American stock markets and international crude oil prices, safe-haven funds bought dollar assets as a safe haven.

In the later stage, the escalation of the epidemic in Europe and the United States will again slow down the pace of resumption of work and drag down some demand.The European Central Bank is expected to ease, the Federal Reserve is unlikely to further easing, the United States economy relative to the euro zone stronger pattern is generally more favorable to the dollar.In addition, a new round of fiscal stimulus is unlikely ahead of the US presidential election and weakening us inflation expectations will weigh on gold prices.If the us fiscal stimulus package can be launched after the election, it will improve the US economy and inflation expectations.

Global macro uncertainty makes institutions reduce their positions on the sidelines

As a result of the global macro uncertainty and the strengthening of the DOLLAR index stage, institutions in gold positions to choose to reduce.Holdings in the world's largest gold fund, the SPDR Gold ETF, have fallen 10.64 tonnes to 1,258 tonnes since October, with a particularly sharp reduction of 5.55 tonnes last week, showing signs of accelerating.The CFTC's position data also showed net non-commercial longs for gold rose 5,945 lots overall since October, down from 12,863 lots in September.

At present, there is great uncertainty at the macro level, especially before the US election, the holding strategy of institutions is more cautious, coupled with the reduced probability of the recurrence of the dollar liquidity crisis, the possibility of large-scale reduction of institutions is not great, and there is still a need to allocate safe assets.

Afternoon looking

In the short term, the epidemic situation in Europe and the United States continues to escalate, combined with the approaching ELECTION of the United States, market volatility intensifies, while the DOLLAR index stabilizes and rebounds, creating negative macro conditions for gold prices and technical breaks for short-term gold prices.The risk is that macro risk events will increase market volatility.Shanghai gold 2012 contract below the first target to 380 yuan/gram.

In the medium term, safe-haven demand remains, while the dollar is struggling to achieve a reversal against the backdrop of debt problems, and gold still has support.The focus will shift back to fiscal stimulus after the U.S. presidential election, when inflation expectations pick up and gold returns.