Gold Needs a Stimulus Deal

October 12, 2020 11:20 AM
Gold trades higher on hopes of a stimulus deal
Bulls need a close at $1,935 or higher
New highs by the end of the year?
Precious metals trading

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December gold futures have been trending higher the past few days as traders are hopeful that some sort of stimulus deal can be patched together before the election. Even if it’s just some “stand-alone” deal. Gold futures sold off hard on Tuesday along with equity futures on a Trump Tweet to end talks with Democrats to reach a stimulus deal before the election. Wednesday talks resume, and gold begins to climb back above $1,900. 

At the time of this writing, December gold is trading $1,925. The gold bulls need a close at $1,935 or higher. Another stimulus deal is Dollar negative and positive for gold and what equity traders hope to see before the election. I’m a bit cynical when it comes to trusting politicians to act in the best interest of the people they represent. However, I do remain bullish on gold. The long-term trend remains firmly intact. 

December Gold Daily Chart


I think that the next pop over $1,950 will quickly get us to $2,000. I wouldn’t want to be out of the market as we get closer to the election. I cannot imagine a scenario where we have a clear, undisputable winner on November 3rd. Gold isn’t “looking” for direction. Gold is just waiting for its next explosive rally. The only thing that would surprise me is if gold did not make new all-time highs before the end of the year.
 

If you are interested in discussing the potential opportunities in the metals futures, contact me directly fcholly@rjofutures.com

About the Author

Frank Cholly has 35 years of commodity industry experience. He spent 20 years on the CBOT trading floor.