GOLD & CRUDE OIL TALKING POINTS:
IMF spooks financial markets with 2021 growth downgrade
Gold prices may gain as Trump, Biden talk up fiscal stimulus
Crude oil prices find support as imports from China rebound

Gold prices are digesting losses after Tuesday’s sharp selloff. That seemed to be inspired by an updated set of global economic growth projections from the IMF. While the fund moderated the depth of the recession it envisions in 2020, the vigor of the recovery in 2021 was pointedly downgraded, registering 0.2 percent lower for worldwide GDP growth.

That weighed on market-wide risk appetite. Traders have almost certainly priced in the idea that global growth in 2020 will be generally abysmal at this point, and with the calendar well into October are probably looking ahead toward what is likely to happen beyond the remainder of the fourth quarter. Stocks edged down and haven demand buoyed the US Dollar, weighing on anti-fiat gold by extension.

GOLD PRICES MAY RISE AS TRUMP, BIDEN TALK UP STIMULUS
The US presidential election may retake the spotlight in the day ahead. Democratic challenger Joe Biden will take questions at a town hall event while Republican incumbent Donald Trump will hold a rally. The gatherings are in lieu of a debate between the two candidates, which was called off because Mr Trump refused to participate after organizers adopted a virtual format due to his recent Covid-19 infection.

A key topic of discussion is likely to be the need for additional fiscal stimulus after key parts of the government’s initial relief effort countering the pandemic’s economic impact lapsed. Negotiations on a package appear deadlocked despite Mr Trump’s about-face decision to re-engage in talks after abruptly cancelling them just days before.

Biden and Trump seem to concur that further stimulus is needed, but find plenty of room for disagreement on its size and the spending priorities therein. Nevertheless, comments that suggest some sort of policy support is in train regardless of who prevails in the November 3 presidential election may ease traders’ anxiety and stoke risk appetite. This might pull the Greenback lower and lift gold as a consequence.

CRUDE OIL UP ON CHINA IMPORTS GROWTH, INVENTORY DATA EYED
Crude oil prices have impressively diverged from recent risk-off moves. The cycle-sensitive commodity is typically sensitive to adverse turns in market sentiment and might have been expected to weaken alongside shares. WTI gained on news that Chinese crude imports rose in September following two months of decline, bolstering the demand outlook. China is the largest single-country crude buyer on global markets.

From here, EIA crude oil inventory data is expected to show that stockpiles shed 2.1 million barrels last week. A private-sector estimate from API flagged a larger 5.4-million-barrel drawdown yesterday, hinting at the possibility of an upside surprise in official figures. Such an outcome might lift crude oil somewhat, though a still-dismal demand outlook and broadly bloated storage seem to cap upside potential.

GOLD TECHNICAL ANALYSIS
Gold prices retreated from resistance defining the downtrend since mid-August. Support is in the 1848.66-63.27 area, with a daily close below that threatening a decline below $1800/oz. Alternatively, a daily close above the outer layer of resistance at 1934.00 puts the $2000/oz figure back into the crosshairs.

Gold Price Trend Favors Downside, Crude Oil Eyeing OPEC Report Next

Anti-fiat gold prices climbed cautiously over the past 24 hours as an improvement in market sentiment dented the anti-risk US Dollar. The S&P 500 gained 1.74% against the backdrop of rising US fiscal stimulus hopes as Trump proposed piecemeal fiscal aid after pouring cold water on hopes of a package. These expectations also likely played a role in offering growth-linked crude oil prices a slight boost despite rising US inventories.

Futures tracking benchmark stock indices on Wall Street are pointing tepidly higher in the aftermath of the vice presidential debate. That could spell an upbeat tone to come from financial markets over the remaining 24 hours. That may in turn depress the US Dollar, creating a supportive environment for XAU/USD. However, falling demand for Treasuries could push up yields, depriving the yellow metal from its full potential.

While US economic data continues to outperform relative to expectations, the margin of surprise continues to dwindle. The Citi Economic Surprise Index tracking the United States fell to its lowest since late June. That could open the door to rather lackluster initial jobless claims data and dent gold ahead. Crude oil prices may receive a boost from today’s annual OPEC World Outlook report on rising demand expectations.

The technical picture for gold still seems to favor the downside. A bearish ‘Death Cross’ was formed in late September when the near-term 20-day Simple Moving Average (SMA) crossed under the medium-term 50-day one. Furthermore, the falling trendline from August seems to be maintaining the focus to the downside. Key support sits bellow as a range between 1848 and 1863.

CRUDE OIL TECHNICAL ANALYSIS
WTI crude oil prices are sitting right on key falling resistance from the beginning of this year. This follows a bounce off support which is a narrow range between 36.15 and 37.10. The technical outlook for oil also seems to be favoring the downside given the presence of a bearish ‘Death Cross’. Pushing above August highs could overturn these downside-favoring signals.

Gold Price Outlook Mired by Downward Trend in RSI

GOLD PRICE TALKING POINTS
The price of gold trades in a narrow range following the limited reaction to the US Non-Farm Payrolls (NFP) report, and the precious metal may struggle to retain the series of higher highs and lows from the previous week as the Relative Strength Index (RSI) continues to track the downward trend carried over from August.

GOLD PRICE OUTLOOK MIRED BY DOWNWARD TREND IN RSI
Gold may continue to reflect an inverse relation with the US Dollar ahead of the Federal Open Market Committee (FOMC) Minutes as the precious metal clings to the rebound from the September low ($1849) while the Greenback remains under pressure.

Image of DailyFX economic calendar for US
However, gold has failed to exhibit the bullish trend from earlier this year as it no longer trades to fresh yearly highs during every single month in 2020, and the lack of momentum to hold above the August low ($1863) may indicate a potential shift market behavior as bullion trades below the 50-Day SMA ($1944) for the first time since June.

In turn, the price of gold may struggle to extend the series of higher highs and lows from the previous week as the Federal Reserve relies on its current tools to support the US economy, and the FOMC Minutes may reveal more of the same for the next interest rate decision on November 5 as the Summary of Economic Projections (SEP) show the longer run interest rate forecast unchanged from the June meeting.

The wait-and-see approach for monetary policy may sap investor confidence as the Fed’s balance sheet narrows to $7.056 trillion from $7.093 trillion on September 21, and waning speculation for additional monetary stimulus may prop up the US Dollar as most Fed officials judged that “yield caps and targets would likely provide only modest benefits in the current environment.”

Nevertheless, Chairman Jerome Powell and Co. may keep the door open to further support the US economy as “several participants suggested that additional accommodation could be required,” and the dovish forward guidance paired with the low interest rate environment may continue to heighten the appeal of gold as an alternative to fiat-currencies as the central bank remains “committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible.”

Image of IG Client Sentiment
At the same time, the net-long US Dollar bias has resurfaced in October as the IG Client Sentiment report shows retail traders net-long USD/CHF, USD/CAD and USD/JPY, while the crowd is net-short GBP/USD, AUD/USD, NZD/USD and EUR/USD.

The tilt in retail sentiment may persist even though the FOMC plans to “achieve inflation that averages 2 percent over time,” and the crowding behavior in the US Dollar may coincide with the rebound in the gold prices as key market themes remain in place.

With that said, it remains to be seen if the correction from the record high ($2075) will turn out to be a material change in market behavior or an exhaustion of the bullish trend, and the Relative Strength Index (RSI) may offer a potential signal as the oscillator appears to be on track to threaten the downward trend established in August.

The price of gold pushed to fresh yearly highs throughout the first half 2020, with the bullish price action also taking shape in August as the precious metal tagged a new record high ($2075).
However, the bullish behavior failed to materialize in September as the price of gold traded below the 50-Day SMA ($1944) for the first time since June, with developments in the Relative Strength Index (RSI) negating the wedge/triangle formation established in August as the oscillator slipped to its lowest level since March.
The decline from theyearly high ($2075) may turn out to be a change in trend as the RSI continues to track the downward trend carried over from August, but the indicator may show the bearish momentum abating if it clears trendline resistance following the failed attempt to push into oversold territory.
Need a break/close above the $1907 (100% expansion) to $1920 (161.8% expansion) region to bring the $1956 (23.6% expansion) area on the radar, with the next region of interest coming in around $1971 (100% expansion) to $1985 (261.8% expansion).
However, the price of gold may struggle to retain the advance from the September low ($1849) if it snaps the bullish price sequence from the previous week, with lack of momentum to break/close above the $1907 (100% expansion) to $1920 (161.8% expansion) region

Gold Price Holds Steady as Fed Balance Sheet Approaches June Peak

GOLD PRICE TALKING POINTS
The price of gold trades in a narrow range after slipping below the 50-Day SMA ($1943) for the first time since June, and the break of the August low ($1863) may indicate a potential change in market behavior as the Relative Strength Index (RSI) sits at its lowest level since March.

GOLD PRICE HOLDS STEADY AS FED BALANCE SHEET APPROACHES JUNE PEAK
The price of gold holds near the monthly low ($1849) as the Federal Reserve’s balance sheet widens for the second week to reach its highest level since June, but it seems as though the precious metal will no longer trade to fresh yearly highs during every month in 2020 as the update to the Summary of Economic Projections (SEP) shows the longer run interest rate forecast unchanged from the June meeting.

It seems as though the Federal Open Market Committee (FOMC) will rely on its current tools to support the US economy despite plans to “achieve inflation that averages 2 percent over time,” and waning speculation for additional monetary support may keep the price of gold under pressure as the pullback from the record high ($2075) largely tracks the correction in global equity prices.

Looking ahead, the FOMC appears to be on track to retain the current policy at the next interest rate decision on November 5 as the central bank vows to “increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace,” and the it remains to be seen if more of the same from Fed officials will continue to drag on investor confidence as Chairman Jerome Powell tells US lawmakers that the committee remains “committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible.”

Until then, swings in risk appetite may continue to sway the price of gold as the precious metal appears to be broadly tracking the change in global equity prices, and the pullback from the record high ($2075) may turn out to be an exhaustion in the bullish trend rather than a change in market behavior as the crowding behavior in the US Dollar largely persists.

Image of IG Client Sentiment
The IG Client Sentiment report continues to show retail traders net-long USD/CHF, USD/JPY and USD/CAD, while the crowd remains net-short AUD/USD, EUR/USD, and NZD/USD. GBP/USD has bucked the trend as positioning flips for a second time this month, with 55.51% of traders current net-long the pair as the ratio of traders long to short stands at 1.25 to 1.

Nevertheless, it seems as though the broad based net-long US Dollar exposure will carry into October even though the FOMC retains a dovish forward guidance for monetary policy, and the low interest rate environment along with the ballooning central bank balance sheet may continue to heighten the appeal of gold as an alternative to fiat-currencies as current market trends remain in place.

With that said, the 50-Day SMA ($1943) may continue to track the positive slope from earlier this year, but the technical outlookis clouded with mixed signals asthe price of gold takes out the August low ($1863), while the Relative Strength Index (RSI) sits at its lowest level since March.

The price of gold pushed to fresh yearly highs during every single month so far in 2020, with the bullish price action also taking shape in August as precious metal tagged a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
However, the bullish behavior has failed to materialize in September as the price of gold trades below the 50-Day SMA ($1943) for the first time since June, with recent developments in the RSI negating the wedge/triangle formation established in August as the indicator sits at its lowest level since March.
Lack of momentum to hold above the $1907 (100% expansion) to $1920 (161.8% expansion) region has spurred a break of the August low ($1863), but lack of momentum to break/close below the Fibonacci overlap around $1847 (100% expansion) to $1857 (61.8% expansion) may generate range bound prices as the RSI appears to be reversing course ahead of oversold territory.
Will keep a close eye on the RSI as it appears to be tracking a downward trend, with a move below 30 likely to be accompanied by a further decline in the price of gold like the behavior seen in 2018.
Nevertheless, string of failed attempt to break/close below the Fibonacci overlap around $1847 (100% expansion) to $1857 (61.8% expansion) may push gold prices back towards the $1907 (100% expansion) to $1920 (161.8% expansion) region, but need a move back above the $1971 (100% expansion) to $1985 (261.8% expansion) to bring the topside back on the radar.

GOLD PRICE OUTLOOK:
After suffering steep losses Monday, gold declines have continued, threatening secondary support
Still, the fundamental outlook for the precious metal has remained constant
Thus, the longer-term outlook remains constructive but the shorter-term outlook has weakened
GOLD PRICE FORECAST SOURS AS LOSSES MOUNT
After suffering a substantial decline on Monday, gold has continued lower as the week has progressed. As a result, the shorter-term technical landscape has been upended as various levels of support have been broken. While the fundamental forces at play remain unchanged, the technical developments have seriously eroded gold’s near-term price outlook.

We recently highlighted potential support near $1,862 if gold weakness persisted. Evidently, the area has offered a modicum of support, but a brief period beneath the line may have caused irreversible damage to the technical level. Consequently, the path lower has likely been made easier for bears and they may look to extend lower still. Suffice it to say, support beneath the $1,862 area is rather sparse until $1,800.

The $1,800 mark roughly coincides with the metal’s swing-highs in 2011 and 2012. Should it fail, the series of lower-lows will be continued, only weakening gold further. Therefore, $1,800 might be viewed as the “line in the sand” in the coming days as it looks to ward off an even deeper retracement.

Regardless, the longer-term outlook for gold from a fundamental standpoint has remained constant. With that in mind, recent losses may amount to healthy consolidation in the bigger picture, but they are not to be underestimated over shorter time horizons as gold appears increasingly vulnerable at this stage. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis

GOLD, SILVER, AVERAGE INFLATION TARGETING, FEDERAL RESERVE, CONGRESS – TALKING POINTS:
Precious metals may come under pressure in the lead up to US elections, in the absence of additional stimulus measures.
Silver prices poised to extend slide after slicing through Symmetrical Triangle support.
Gold prices capped by former support-turned-resistance. Are further losses in the offing?
The lack of progress in Congressional stimulus talks, escalating US-China tensions and the absence of additional monetary stimulus could weigh on precious metal prices in the run-up to elections in November, and could see gold and silver continue to retreat from their respective monthly highs.

However, the Federal Reserve’s adoption of average inflation targeting (AIT) and recent comments from New York Fed President John Williams stating that “we’re not shy about doing whatever it takes to get this economy through this really difficult situation and hopefully back to that maximum employment goal as soon as possible” suggests that the longer-term outlook for precious metal prices remains bullish.

That being said, it looks relatively unlikely that the central bank will adjust its current monetary policy settings prior to the US Presidential election.

Moreover, with Congress now shifting focus to replacing the late Supreme Court Justice Ruth Bader Ginsburg, and still needing to approve a continuing resolution to fund the government before September 30, the chances of securing a fiscal stimulus package before November 3 seems out of the question.

To that end, precious metals may struggle to move higher in the near-term if US policymakers fail to quench the market’s need for further stimulus.

Silver appears poised to extend its fall from the yearly high set on August 7 (29.91), after collapsing through Symmetrical Triangle support and the trend-defining 50-day moving average (25.20).

A push back towards the sentiment-defining 200-DMA (20.43) looks on the cards, as both the RSI and MACD indicators plunge below their neutral midpoints and the slope of all three moving averages notably plateau.

A daily close below the September 1980 high (24.18) would probably validate the break of the uptrend extending from the March low (11.64) and carve a path for price to test the 38.2% Fibonacci (22.93) and psychologically pivotal $22/oz mark.

Conversely, price may bounce back to test the July high (26.27) if support at the August low (23.58) remains intact, with a close above the 21-DMA (26.90) needed to bring the yearly high (29.91) into play.

In a similar fashion to its silver counterpart, gold prices look poised to push to fresh monthly lows after slicing through Symmetrical Triangle support and the 50-DMA (19.15).

The RSI snapping its uptrend from the March extremes, combined with the MACD indicator plunging below its neutral midpoint, is indicative of swelling bullish momentum, which may ultimately trigger a more substantial correction if buyers fail to overcome resistance at the 2011 high (1920.94).

However, with price yet to close below the September 8 swing-low (1906.80) there remains a distinct possibility that price could climb back towards the monthly high (1992.63).

To that end, failure to close below the psychologically imposing $1900/oz mark could encourage would-be buyers and generate a recovery back towards the July high (1984.22), if price successfully overcomes key resistance at the 2011 high (1920.94) and 21-DMA (1942.45).

On the other hand, a daily close below the $1900/oz level would probably validate the downside break of Symmetrical Triangle consolidation and could ignite a push towards support at the 200-DMA (1750), with the implied measured move (1715) suggesting price could fall as much as 11% from current levels.

The price of gold continues to trade within the monthly range following the Federal Reserve interest rate decision, and current market trends may keep the precious metal afloat as the crowding behavior in the US Dollar persists in September.

GOLD PRICE CONTINUES TO REBOUND FROM 50-DAY SMA FOLLOWING FOMC
The price of gold tagged the 50-Day SMA ($1935) for the second time this month as the update to the Fed’s Summary of Economic Projections (SEP) showed no change in the interest rate dot-plot, and it seems as though the central bank is in rush to alter the path for monetary policy as the longer run interest rate forecast remains unchanged from the June meeting.

The reaction suggests market participants were anticipating a more dovish forward guidance as the Federal Open Market Committee (FOMC)plans to “achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time,” but little hints of a looming shift in the monetary policy outlook are likely to keep current market trends in place as the central bank remains on track to “increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace.”
Looking ahead, Chairman Jerome Powell and Co. may stick to the same script at the next interest rate decision on November 5 as “forecasts from FOMC participants for economic growth this year have been revised up,” but the wait-and-see approach may continue to coincide with the crowding behavior in the US dollar even though the Fed’s balance sheet climbs back above $7 trillion in August.

Image of IG Client Sentiment
The IG Client Sentiment report once again reflects a net-long US Dollar bias as retail traders are net-long USD/CHF, USD/CAD and USD/JPY, while the crowd is net-short GBP/USD, AUD/USD, EUR/USD and NZD/USD.

It seems as though the tilt in retail sentiment will persist as the macroeconomic environment remains largely unchanged, and the pullback from the record high ($2075) may prove to be an exhaustion in the bullish trend rather than a change in market behavior as the price ofgold trades to fresh yearly highs during every single month so far in 2020.

With that said, it remains to be seen if bullion will extend the rebound from the 50-Day SMA ($1935) as the moving average continues to track the positive slope from earlier this year, and the Relative Strength Index (RSI) may help to validate the continuation pattern established in August as the indicator appears to be bouncing back from its lowest reading since June.

The technical outlook for the price of gold remains constructive as it trades to fresh yearly highs during every single month so far in 2020, with the bullish price action also taking shape in August as precious metal tagged a new 2020 high ($2075).
The price of gold cleared the previous record high recorded in September 2011 ($1921) even though the Relative Strength Index (RSI) failed to retain the upward from June, but the indicator registered a new extreme reading (88) for 2020 as the oscillator pushed into overbought territory for the third time this year.
In turn, theRSI sell-signalregistered in August could be indicative of a potential exhaustion in the bullish behavior rather than a change in trend as it breaks out of the downward trend, and the indicator may help to validate the wedge/triangle formation as the oscillatorappears to be bouncing back from its lowest reading since June.
Will keep a close eye on the RSI as it seems to have bottomed out in September, but need to see the oscillator to push towards overbought territory to indicate a bullish outlook, with a move above 70 likely to be accompanied by higher gold prices like the behavior seen in July.

Until then, the price of gold may continue to consolidate following the string of failed attempt to close below $1907 (100% expansion) to $1920 (161.8% expansion), but need a closing price above the Fibonacci overlap around $1971 (100% expansion) to $1985 (261.8% expansion) to bring the $2016 (38.2% expansion) to $2025 (78.6% expansion) region back on the radar.
A break/close above the $2016 (38.2% expansion) to $2025 (78.6% expansion) region opens up the record high price ($2075), with the next area of interest coming in around $2064 (50% expansion) followed by $2092 (161.8% expansion).

49 DAYS UNTIL THE US PRESIDENTIAL ELECTION
The latest polls show former Vice President and Democratic nominee Joe Biden in the lead not only in the general election but also in key swing states. While Donald Trump won these states in the 2016 election, the latest political data indicates a strong inclination for Mr. Biden. Having said that, betting averages are showing signs of convergence. But more on that later.

As mentioned in my prior piece, key swing states like Florida continue to be the battleground of campaign capital allocation. Both Trump and Biden combined have spent close to $50 million in television ads alone in Florida. In 2008 and 2012, the state turned blue and Barack Obama was elected; in 2016 it turned red and Donald Trump entered the White House.

Looking ahead, how the margins fluctuate in the Biden-Trump spread ahead of the presidential debate on September 29 may create asymmetric risks of volatility. If the race becomes progressively tighter and the outlook becomes less clear, a directional change in the polls may catalyze a bout of volatility as traders reposition themselves to the new geopolitical landscape.

2020 ELECTION BETTING AVERAGES
Gold Prices Ripe for Breakout? Election Polls Show Diverging Trend
Source: RealClearPolitics

Returning to betting averages, the data briefly widened after converging to its narrowest point since the cross-over in June. However, betting averages indicate a slow but steady confluence despite polling data showing a widening Biden-Trump spread. How this trend plays out in the next 49 days may be critical.

GOLD PRICE OUTLOOK
Gold prices appear to be nearing the end of a consolidative period following their aggressive rally in late-July and early-August. XAU/USD is forming what looks to be a continuation pattern known as a bullish Pennant. The formula for this technical design typically involves a rally followed by a digestive interim before the prior uptrend resumes.

However, chart formations do not always produce the embedded expectations associated with the technical pattern. I noted this phenomenon with my analysis of USD/MXN. Consequently, if gold prices break down, selling pressure may briefly encounter some friction at near-term support at 1899.77, but if that floor is broken the next major level may be at 1810.33.

On the other hand, if the compression zone between descending resistance and ascending support catalyze a move higher, a bullish streak for gold may ensue. A key test of its durability will likely be the all-time swing-high at 2069.77. If cleared, bullish sentiment may continue to build with a confluence of narratives about its bright prospects, potentially pushing XAU/USD higher.

GOLD FUNDAMENTAL OUTLOOK, INFLATION EXPECTATIONS, FEDERAL RESERVE, US DOLLAR – TALKING POINTS:
Gold prices poised to rise ahead of the Federal Reserve interest rate decision on September 16.
The central bank’s adoption of average inflation targeting may underpin precious metal prices.
Rising inflation expectations driving gold prices to record highs.
The fundamental environment nurturing gold’s surge to fresh record highs has shown little signs of abating, despite a noticeable stabilization of the Federal Reserve’s balance sheet in recent weeks and the inability of US policymakers to deliver an additional round of much needed fiscal stimulus, as the upcoming FOMC meeting shifts into focus.

GOLD FUNDAMENTAL FORECAST: BULLISH
After ballooning over $3 trillion in the space of three months and eventually peaking on June 10 at $7.17 trillion, the Fed’s balance sheet has noticeably plateaued over the last 12-weeks and could be major factor behind the recent consolidation seen in gold prices.

Moreover, 5-year inflation expectations have struggled to move higher after climbing to a post-crisis high of 1.67% on August 27, which appears to have coincided with bullion’s struggle to overcome psychological resistance at the $2000/oz mark.

That being said, the central bank’s adoption of average inflation targeting (AIT) suggests that the provision of additional monetary stimulus is on the cards, as the Fed seeks “to achieve inflation that averages 2 percent over time”.

Gold Vs 5-Year TIPS
Chairman Jerome Powell flagged the “persistent undershoot of inflation from our 2 percent longer-run objective” as a cause for concern and stressed that “inflation that is persistently too low can pose serious risks to the economy [and] lead to an unwelcome fall in longer-term inflation expectations” at the Federal Reserve’s annual Jackson Hole economic symposium.

Powell added that “well-anchored inflation expectations are critical for giving the Fed the latitude to support employment when necessary”.

Therefore, in light of an unwelcomed rise in continuing jobless claims and an unemployment rate of 8.4%, it seems rational to expect US policymakers to act at their upcoming monetary policy meeting.

Continuing jobless claims for the week ending August 29 increased to 13.38 million, overshooting the expected 13.29 million print.

Furthermore, the lack of progress in Congressional stimulus talks may prompt the central bank to pick up the slack in its quest to achieve its “maximum employment and price stability goals”, as the Senate failed to pass a drastically reduced fiscal aid package.

The proposed $500 billion stimulus package is a fraction of the $2.2 trillion demanded by Democrats, and less than the Republican’s suggested $1 trillion bill.

To that end, gold looks poised to climb back towards the record high set on August 7 if the US central bank opts to deliver additional stimulus measures.

54 DAYS UNTIL THE US PRESIDENTIAL ELECTION
Former Vice President and Democratic nominee Joe Biden continues to maintain a lead in the polls over President Donald Trump. This is not only true of the general election but also of Mr. Biden’s popularity in key swing states. Having said that, investors should be cautious when assessing the outcome of the election even before the upcoming presidential debate on the 29th.

CONGRESS FAILS AGAIN TO DELIVER ON CORONAVIRUS RELIEF BILL
On Thursday, news broke that the Republicans’ coronavirus relief bill was shot down in the Senate by all the Democrats and one Republican. The left side of the aisle was reportedly dissatisfied with the watered-down stimulus bill that included a reduction of unemployment insurance to $300 per week from $600.

The bill would have also included new small business loans, additional funding for schools and directed money towards coronavirus treatment, vaccines and testing. The legislation did not include another round of US$1200 stimulus checks that the first stimulus bill incorporated. Democrats were also unhappy with the bill not including provisions for local and state governments.

Senate Majority Leader Mitch McConnell accused Democrats of blocking the effort on partisan grounds. The passage of another Republican-drafted relief bill could result in a more favorable tilt in polling data ahead of key election dates. Looking ahead, political friction in the coming months may only be amplified and further push back the timeline for more fiscal policy support.

XAG/USD ANALYSIS
Silver prices have consolidatedsince late July and leading into early August after the precious metal topped at a seven-year high at 29.8/oz. Since then, XAG/USD has drifted sideways, buttressed by two shelves at 26.414 and 24.371. A break to the upside opens the door to retesting the multi-year swing high.

Conversely, if XAG/USD breaks back belowresistance-turned-support at the early-August top, silver prices may experience a notable pullback. While a continuation pattern known as a Symmetrical Triangle appears to be forming – and therefore implies a resumption of the prior uptrend after a period of consolidation – the monthly chart shows a far gloomier picture.

Seen this way, silver prices appear to be showing signs of topping at a familiar inflection point going back to early 2013 at 28.202. Before falling further, XAG/USD was trading at this critical level roughly from the start of February to the beginning of April before decidedly turning lower. Familiar signs of hesitation could send a chilling message about the short-term outlook.