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James Hyerczyk

Gold futures are trading flat late Monday after testing a three-week high earlier in the session as expectations of a limited U.S. coronavirus relief bill dented the appeal of bullion, which is used as a hedge against likely inflation.

At 19:06 GMT, December Comex gold is trading $1928.30, up $2.10 or +0.11%.

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Short-term gold traders want a stimulus plan before the election because they are playing for a spike to the upside. Longer-term gold investors aren’t worried about the timing of the stimulus because they believe it’s coming anyway. Some are even betting that a Joe Biden victory in the presidential election will lead to an even bigger fiscal stimulus package.

Daily December Comex Gold

Short-Term Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed earlier in the session, but that rally fizzled, setting up the market for a minor reversal. The main trend changes to down on a move through $1877.10.

The short-term range is $2089.20 to $1851.00. Its retracement zone at $1970.10 to $1998.20 is the primary upside target.

The major support is a long-term retracement zone at $1889.70 to $1842.60. This zone stopped the selling at $1851.00 on September 24 and on October 7 at $1877.10.

The minor support levels are $1917.40, $1902.10 and $1880.00.


Short-Term Outlook

Fundamentally, this market needs stimulus or just serious stimulus talk to keep it underpinned.

A major stimulus announcement should spike prices to the upside with $1970.10 the minimum target.

Just talking about stimulus likely means a rangebound trade, while calling off the negotiations will likely drive prices into the series of retracement levels between $1902.10 and $1880.00.

The way of least resistance is to the upside, but the series of support levels could act like a magnet and draw the market lower.

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