Gold Price Analysis: Bulls take up the safe-haven baton on covid spread

• Gold prices finding demand on a fragile USD and lower US stocks.
• COVID is back at the forefront as it spreads at an alarming rate  throughout the US states.  

The price of gold is trading at $1,881.76 and has travelled between a low of $1,862.88 and a high of $1,883.81 having accumulated around 0.90% in value at the time of writing.  

The US dollar continues to struggle on the bid as it tests a critical level of resistance and confluence in the recent 61.8% Fibonacci retracement of the bearish impulse.  

DXY daily chart

The dollar has been firmer on the back of surging yields as markets presumed that there would be less of a requirement for printing of dollars due to the welcomed news of a vaccine.    

The news put a  damper on gold, but there are too many uncertainties and questions that remain about how much protection it offers, to whom and for how long.

Pfizer Inc.’s Covid-19 vaccine is on  track to be authorized as early as next month, but governments are facing an enormous logistical challenge in getting enough people vaccinated.

The spread of the virus is worrying investors and renewed fears are pressuring stocks towards the end of this week.  

More in this here from yesterday:  US covid outbreak uncontrolled throughout all states.

Subsequently, markets  started to see  a rotation from economic growth stocks back into the stay-at-home choices on Wednesday.

Today, we are seeing a follow-through of this and the S&P 500  is down over 1% at the time of writing. It  could be on a collision course for the 6th Nov lows.

TDS analysts bullish on gold

Meanwhile, analysts at TD Securities explained that with ”treasury supply pressures, rising real rates and Fed pricing inching closer to late 2023 from mid-2024 are all reasons that the Fed may step in to keep policy supportive and prevent an undue deterioration in financial conditions.”

”As a result, we expect the Fed to change the composition of Treasury purchases in favour of longer-dated bonds, which should keep ten-year yields capped around 1%.”

”All of this suggests real rates should continue on their downward trajectory and ultimately continue to fuel a bull market in gold.”