Gold prices tumbled 4.5% on Monday as a coronavirus vaccine developed by Pfizer and BioNTech showed a 90% success rate in an interim analysis of its phase 3 clinical trial. Optimism faded quickly however, as traders reassessed the near-term implications, with the global economy facing an imminent threat of another pandemic wave and virus-related lockdown measures. Even if the vaccine is proven successful, it may still take months before it passes all the regulatory requirements and becomes publicly available. Manufacturing capacity, storage and transportation are future challenges too. One of the main drags on gold prices is the prospect of smaller fiscal and monetary stimulus if economic growth accelerates with the help of the vaccine. The expansion of central banks’ balance sheets, alongside an ultra-low interest rate environment, have propelled a big rally in precious metal prices this year. This is because gold is commonly viewed as a good hedge against fiat money and a store of value. In the medium- to long-term, however, a slower pace of monetary easing and potential tapering may put gold at risk for a pullback. The Federal Reserve balance sheet fell marginally to US$ 7.157 on November 4th from a record high of US$ 7.177 trillion in late October, reflecting ample liquidity in the markets
EUR/USD is turned neutral with current retreat. But further rise is still mildly in favor as long as 1.17971 minor support holds. Above 1.1920 will target a test on 1.2011 high first. Break will resume whole rally from 1.0635. However, break of 1.1791 will turn bias back to the downside, to extend the corrective pattern from 1.2011.
After forming a support base near the 1.2940 level, the British Pound started a fresh increase against the US Dollar. GBP/USD broke the 1.3000 and 1.3120 resistance levels to move into a positive zone. Looking at the 4-hours chart, the pair gained pace after it broke the 1.3020 resistance and a contracting triangle. There was a sharp rise above 1.3100, and a close above the 100 simple moving average (4-hours) and the 200 simple moving average (4-hours). However, the pair seems to be facing a strong resistance near the 1.3200 level. A successful break and close above the 1.3200 resistance might open the doors for more gains towards the 1.3240 and 1.3260 levels. The next major resistance sits at 1.3300. Conversely, there is a risk of a downside correction below 1.3180. The first major support is near the 1.3100 zone (the recent breakout zone). Any further losses may perhaps lead GBP/USD towards the 1.3020 support zone and the 100 simple moving average (4-hours).
USD/JPY maintaining its bullish potential in the near-term. The 4-hour chart shows that it has crossed above all of its moving averages, although with the 20 SMA slowly turning north well below the larger ones. Technical indicators reached overbought levels, the Momentum still advancing, and the RSI stable above 70. A daily descendant trend line coming from March high comes around 105.00 this Tuesday, providing critical resistance, with further gains expected on a break above it. USD/JPY support levels are105.30 104.90 104.50 and resistance levels are105.65 106.00 106.40.
The Australian Dollar may be readying to extend gains against the US Dollar after AUD/USD confirmed a breakout above a Descending Triangle chart pattern. The latter is typically a bearish formation but it can at times signal a resumption of the previous trend. In this case, it would be an extension of gains from March through the middle of August. The Aussie has also confirmed a push above the 50-day Simple Moving Average. Prices are facing August highs. Taking out the latter exposes peaks from June 2018. Otherwise, descending through the 0.7006 – 0.7043 support zone could shift the technical landscape to bearish.
USD/CAD is turned neutral with a temporary low formed at 1.2928. Further fall will remain in favor as long as 1.3097 minor resistance holds. Break of 1.2928 will extend larger decline to 61.8% projection of 1.4667 to 1.2994 from 1.3389 at 1.2355. On the upside, however, firm break of 1.3097 will indicate short term bottoming and turn bias to the upside for stronger rebound.
The West Texas Intermediate (WTI) crude is feeling the pull of gravity during Tuesday's Asian trading hours, with investors pricing prospects of a renewed coronavirus-induced slowdown in Europe and the US. The North American oil benchmark tested the 50-day simple moving average (SMA) support at $39.46, having hit a high of $41.33 on Monday. On Monday, the US drugmaker Pfizer announced positive results for its coronavirus vaccine, sending stock markets and other risk assets higher. WTI rallied from $37.34 to $41.33. The most notable move was in the US junk (high risk) bond yield, which fell by over 30 basis points to hit record lows (bond prices and yields move in opposite directions).
Technically, gold prices plunged 4.5% on Monday, registering their largest intraday swing seen since mid-August. The overall trend appears to lack clear direction after prices broke above the ceiling of the consolidative range before plunging below the lower boundary. The formation of a large bearish candlestick usually suggests strong downward momentum, which could lead to further losses with an eye on US$ 1,885 support.
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