Analysis of gold, oil and silver prices.

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Gold prices moved in a narrow range north of $1,900 an ounce today as investors wait for news from the US.
OPEC+ held a meeting yesterday to discuss ways to support the oil market amid fears of a second wave
The US investment bank Citi set a target price for silver of $40 per ounce for the next 12 months

Commodities are trading in a tight trading range today as investors are eagerly awaiting news from the U.S. regarding the new stimulus package. While gold and oil are trading in a tight range, silver prices have made significant gains this week.

Gold price likely to race higher due to stimulus package

Gold prices today moved in a narrow range north of $1,900 an ounce ahead of the deadline for an agreement on a new coronavirus stimulus plan in the United States and the upcoming presidential elections in November.

The spot gold price fell 0.2% to $1,901.10 an ounce in the morning, while the gold futures price in the US fell 0.4% to $1,904.50.

“Gold bullion sentiment remains hesitant and is holding the spot gold price around $1,900 as some of the world’s largest gold futures… continue to hold out hopes that the Democrats and the White House can reach an agreement over the immediate term,” said Han Tan, a market analyst with FXTM.

Tan added that gold could continue to weaken as these expectations diminish “as the perception drops that a new round of U.S. financial stimulus measures are more likely to be a post-election event.

Drew Hammill, deputy chief of staff to the Democratic House of Representatives chairman Nancy Pelosi, said Pelosi and Treasury Secretary Steve Mnuchin continued to bridge their differences over the stimulus plan.

Pelosi expects that by the end of Tuesday we will know if there is a chance to pass the stimulus package before the presidential election on November 3.

Many investors have recently started trading gold as they see it as a hedge against inflation and currency devaluation, as there are unprecedented incentives around the world to alleviate coronavirus damage.

“Many investors are on the sidelines and especially because of the upcoming (US) elections,” said Brian Lan, CEO of GoldSilver Central. Lan also said that the passage of a new stimulus would result in gold testing the upper end of the $1,882 to $1,932 range.

Consolidation is occurring in gold as the price action has created a series of lower highs and higher lows. News of the stimulus package is likely to facilitate a significant upward or downward move, with targets at $1,970 and $1,850 respectively.

Oil prices stabilize

Elsewhere, oil prices changed slightly today, stabilizing after several days in the red amid concerns that an increase in new Covid 19 cases is slowing the recovery in fuel demand.

Brent crude oil futures contracts lost 4 cents or 0.1% at $42.58 a barrel through 0635 GMT and rebounded somewhat after falling to $42.19 at the beginning of the session. US West Texas Intermediate (WTI) crude oil futures rose 1 cent to $40.84 a barrel, a significant recovery from an earlier decline to $40.48.

The number of new coronavirus cases reached 40 million on Monday, as the second wave in Europe and the U.S. leads to new restrictive measures. Vandana Hari, energy analyst at Vanda Insights, said the “clouds of darkness” are back over the oil market.

“The demand picture was already weak; supply-side sentiment was affected on Monday when Saudi Arabia and Russia turned away from signalling that they would reconsider the planned OPEC+ production increase in January,” she added.

OPEC+ held a meeting yesterday to discuss ways to support the oil market against a background of growing fears over the resurgence of coronavirus cases.

The organization decided to maintain the 7.7 million barrels per day (bpd) production limit until December and to withdraw the cuts to 5.8 million bpd in January.

Despite failed attempts to reach $42.50, crude oil prices are still above the 200 DMA mark, which remains an important upward target. If things go down, the 100 DMA will provide near $38 support for bulls.

Silver prices could reach $40 in a year – Citi

Silver was in the spotlight this week after a major US investment bank Citi set a target price of $40 an ounce for the next 12 months.

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