Monday, November 9, 2020

Gold Futures Extend Rally After Joe Biden’s Win

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News shaping
the markets today

     

What’s happening: Gold futures moved higher on Monday to a seven-week high after Joe Biden's victory in the US Presidential race.

What happened: Gold had been on an upturn last week, propped up by weakness in the greenback on uncertainties surrounding the US Presidential election.

With the Democratic party having won enough states to reach the 270 electoral votes required to win the election, markets now turn their focus on the government’s stimulus package.

Why it matters: The decision on the government’s covid-19 relief package had been delayed till after the decision. Irrespective of which party won the election, the additional fiscal stimulus was widely expected after the announcement of the election outcome.

The injection of funds is expected to exert pressure on the US dollar, supporting elevated gold prices as the yellow metal is viewed as the greenback’s main safe-haven rival as well as a hedge against inflation.

On the other hand, the Republicans have gained a majority in the Senate, which is expected to limit the magnitude of the fiscal stimulus from the US.

Meanwhile, the Biden administration said they have already started working on plans to combat the covid-19 crisis, with the case count in the country approaching the 10 million mark.

Gold prices were also lifted by concerns around a slowdown in the recovery of the US economy. Markets were disappointed by the Labor Department’s closely watched jobs report released on Friday. The NFP (nonfarm payroll) report showed the country had added only 638,000 jobs in October, versus 672,000 new adds in the previous month. October’s figures were the lowest employment gain in five months.

Gold for December delivery rose 0.3% to close at $1,951.70 an ounce on Friday. The precious metal notched a weekly gain of 3.8%, its best performance since the week ending July 31. December silver climbed 1.9% to settle at $25.662 an ounce, recording its highest close in two weeks.

Gold futures extended last week’s rally during the Asian session this morning, rising 0.7% to $1,964.50 an ounce.

What to watch: Markets await any announcement from the new government on the fiscal stimulus. Investors will also keep an eye on the coronavirus cases in the country, economic data indicating the momentum of the economic recovery and the performance of the US dollar.

The Markets Today

     

European stocks will be in focus today, following Joe Biden’s victory in the US presidential race.

Context: The European markets settled mostly lower on Friday with investors awaiting the outcome of the US Presidential election and digesting news of rising covid-19 numbers.

Details: Investors in Europe were still waiting for the outcome of the US election when markets closed on Friday.

With Joe Biden having won 273 Electoral College votes, the Democratic candidate crossed the 270 mark needed to win the Presidential election. Markets can now turn their focus to other aspects of the global economy.

Investor sentiment has been hit by the rise in covid-19 numbers in Europe. Italy announced a partial lockdown after recording its highest single-day death toll since April on Thursday. Greece has declared a national lockdown following a rise in infections.

Weak economic data from Germany also disappointed investors, with industrial output rising merely 1.6% in September, below the consensus view of a 2.7% increase. Investors also focused on the low new job additions in the US, despite a decline in the unemployment rate to 6.9% in October, from a previous reading of 7.9%.

The pan-European Stoxx 600 closed lower by 0.2% on Friday, with auto stocks leading the losses. Shares of basic resources bucked the trend, adding around 2%. While Germany’s DAX 30 declined by 0.7% and the French 40 lost 0.46%, London’s FTSE 100 added 0.07% on Friday.

What to watch: Markets will keep an eye on the stimulus announcement by the US following the victory of Joe Biden. Coronavirus continues to be a top concern for investors, with global cases rising past 50 million.

Other Markets: US indices closed mixed on Friday, with the Dow Jones index and S&P 500 down 0.24% and 0.03%, respectively, while the Nasdaq 100 gained 0.04%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Japan's current account and bank lending, National Australia Bank's index of business confidence, Singapore’s foreign exchange reserves, Denmark’s balance of trade, Germany’s balance of trade, Cyprus’s balance of trade, Russia’s vehicle sales, Mexico’s inflation rate, as well as the US consumer inflation expectations.