Gold bulls have to be patient – likely no deal between Democrats and Republicans before the election

By Admiral Markets

Source: Economic Events October 21, 2020 – Admiral Markets’ Forex Calendar

Gold traders are still waiting on impulses while the yellow metal continues to trade around 1,900 USD.

One of the reasons seems to be that much of the upcoming developments in Gold depend on the Coronavirus relief package.

House Speaker Nancy Pelosi set a deadline of Tuesday for when a deal must be met. While Democrats and Republicans aim to reach a deal before the US presidential election on the 3rd of November, as of now, no deal has been struck.

While short-term disappointment is certainly capable of initiating heavier selling, which could drive Gold down to its September lows at around 1,850 USD and probably even lower to the 1,800/810 USD region, it seems clear that an economic package will eventually be delivered.

In fact, such a relief package could arrive at a time that is historically known to be bullish for Gold, from a seasonal perspective (December/January) driving the price of Gold significantly back above 2,000 USD – only with a small delay.

Our lines already underline our bullish bias and outlook for the yellow metal:

• A massive economic package for the US economy is necessary
• It needs to be financed with freshly printed US-Dollars from the US central bank FED

This is clearly Gold bullish.

That said, we remain cautious in regard to long engagements below 1,975 USD on a daily time-frame, technically, but are keeping this level in mind since it could be the initial bullish catalyst driving Gold up to its current yearly and All-Time highs around 2,075 USD and even higher:

Source: Admiral Markets MT5 with MT5SE Add-on Gold Daily chart (between June 05, 2019, to October 20, 2020). Accessed: October 20, 2020, at 10:00 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, and in 2019, it increased by 18.9%, meaning that in five years, it was up by 28%.

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