Gold suffers a stock market setback

Bullish gold investors would have been disappointed with gold’s overnight price action last night. With the US stimulus impasse and tech anti-trust fears sparking a stock market fall, notably the Nasdaq, gold plummeted by 1.60% to USD1840.00 an ounce, trading as low as USD1825.50 an ounce intra-day. Gold moved lower again in early Asia but quickly regained those losses to be unchanged thus far in the session.

DoorDash’s stock market debut saw its stock finish 83.53% higher on the day at USD187.20. It was not enough to save the broader stock market, though, as US equities ended the day in red territory. The inability of gold to yet again weather a sharp fall in US equities without falling sharply itself, is a huge disappointment. It also had to contend with firmer US yields and a higher US dollar in gold’s defence. If nothing else, it appears that the overnight move has culled out a lot of short-term speculative long positioning enacted this week, leaving the market more balanced now.

It is a fact of life that deep pockets and steely nerves are required to be involved in gold and silver markets these days. As I have previously stated, I believe that gold traced out a structural low at the March-September 50% Fibonacci at USD1760.00 an ounce last week. Only a daily close below USD1760.00 an ounce calls that outlook into doubt.

Gold could well experience more pain if stocks in the US continue to move lower tonight, and a dovish FOMC next week may seem like an age away. Gold has support layered at its overnight low at USD1825.50 an ounce, USD1820.00 an ounce, and then the 200-day moving average at USD1808.60 an ounce. Initial resistance is at USD1876.50 an ounce, Tuesday’s high and today, the 50-day moving average.