The stimulus countdown clock is ticking with just under two weeks until the Presidential elections. The risk-off sentiment seen during this mornings sessions shows investors are growing tired of hearing that stimulus talks are “progressing”.
There have been conflicting stories coming out from both sides. Nanci Pelosi, Democratic House Speaker has stated there is still time for a deal to be struck and both sides are coming closer to an agreement. Whereas McConnell, the Republican Senate Majority leader has warned the White House not to take the deal as Pelosi is operating in bad faith, attempting to complicate Trump’s Supreme Court nomination, Amy Barrett.
It is widely understood that a stimulus package will arrive at some point, it is just a matter of when and how large. McConnell has made it known that the Republican party, who control the Senate, are not in favour of such a large package. The longer the negotiations continue, the less likely chance of a package being agreed upon prior to the US Presidential elections.
US equities are looking fragile and threatening further downside if a stimulus package is not provided soon. If a stimulus deal is struck this will be bullish for gold, equities and commodity-related currencies. Keep in mind, the stock market thrives on rumours and hope, if there is any excuse to rally it will take it.
We are positioning on gold due to the retest and technical structures.
GOLD – 4 Hour Charts
We have seen the rejection at the 1935 region as highlighted yesterday followed by a retest of the negative trend line.
GOLD 1 Hour Charts
Trade Setup: BUY market execution, current price 1916, stop loss 1904 and take profit targets 1945 – 1953
Stop loss: 120 pips
Take profit: 390-470 pips