Weekly Gold Review: Super Week Warning! US Elections, Non-Farm Payrolls, and Major Central Bank Meetings (US, UK, Australia) Imminent - Market Expected to Experience Significant Volatility

Over the past week, gold prices have fluctuated dramatically, experiencing significant downward pressure after falling below the $1900 mark. The US dollar index received a boost as the US coronavirus stimulus package remained elusive and major European countries re-implemented lockdowns due to surging COVID-19 cases. Spot gold fell amid the rising dollar index and a sharp sell-off in US stocks, closing at $1878.49 per ounce on Friday (October 30), down $22.60 or 1.19% for the week. In October, spot gold fell $6.12 or 0.32%. COMEX December gold futures closed up 0.6% at $1879.90 per ounce, down 0.8% for October.

Looking ahead to next week, financial markets will face multiple major tests. On Tuesday, the US will hold a globally watched election, with the outcome uncertain as to whether it will be revealed that evening. In addition, several major central banks will announce interest rate decisions, including the Federal Reserve, the Bank of England, and the Reserve Bank of Australia. On the economic data front, the US will release the October non-farm payrolls report, along with ADP employment data, initial jobless claims, and the ISM non-manufacturing PMI. Undoubtedly, the market will experience a thrilling week.

Weekly News Roundup

US Election Enters Final Stages; Early Voting Numbers Hit Record High

With the pandemic continuing and economic recovery sluggish, the US will hold its final election in three days, a vote of confidence in Trump's four years in office. Data shows that American participation is unprecedentedly high, with over 90 million people, more than a quarter of the total population, having already voted early, breaking the US election record.

This breaks the record for early voting in US elections, nearly double the 2016 figure (47 million). This year's early voting also accounts for 65% of the total votes cast in 2016 (approximately 138 million).

Reuters believes that this record number reflects unprecedented enthusiasm among US voters. The New York Times describes how the raging pandemic, delays in mail-in ballots, long lines at polling stations, and court rulings on election results are all testing confidence in the US electoral system.

In North Carolina, Florida, Georgia, and Arizona, early voting numbers exceeded 80% of the total number of votes cast four years ago, while Wisconsin and Michigan reached double the number four years ago. The New York Times believes that this year may be the first time in US election history that more than 150 million people will vote.

Worth noting is the situation in key swing states. In Florida, 8.29 million voters have already cast early ballots by the 31st, accounting for 59% of the total electorate. Approximately 3.28 million ballots are from registered Democrats, and 3.16 million are from registered Republicans, a difference of about 120,000.

In Pennsylvania, 2.37 million mail-in ballots have been submitted (early in-person voting numbers not included), of which 1.57 million are from registered Democrats and 540,000 are from registered Republicans, a significant gap. By age, voters over 66 years old showed the highest enthusiasm, with 920,000 early votes, accounting for 38.9% of the total.

Early voting numbers for both parties are similar in Florida; however, in Pennsylvania, Democratic voters are three times the number of Republican voters.

On Friday, Texas also released data showing that early voting in the state exceeded 9 million, surpassing the total number of votes cast in the previous election.

In summary, in the 20 states that have released voter party affiliation, approximately 19.9 million registered Democrats have voted early, 6.9 million more than the 13 million registered Republicans. However, party affiliation does not necessarily equate to their voting results.

The Associated Press stated that the results of early voting cannot be used to conclude that the Democratic vote is leading. This is because polls show that many Republican voters believe Trump's warnings about mail-in ballots and plan to vote in person on November 3. Therefore, the Democrats' early voting enthusiasm may be gradually overtaken by the Republicans.

Although Trump continues to lag in the polls, The Hill still points out a "comeback" plan for the US president: Trump must win Florida and Pennsylvania. As long as he can retain Arizona and other states he won four years ago, even if he loses Michigan and Wisconsin, he can secure re-election.

According to the RCP polling website, Biden currently holds an average lead of 1.2% over Trump in Florida and 3.6% in Pennsylvania, with the situation in both states remaining tight. Biden's popularity among the Latino community in Florida has also raised concerns among local Democrats.

With the US election voting day approaching, President Trump, seeking re-election, and Democratic presidential candidate Biden are stepping up their campaigning in key swing states Pennsylvania and Michigan during the final weekend before the election.

Trump held four rallies in Pennsylvania on Saturday. Trump told his supporters that "the nation will achieve the American dream." Trump said the US is only a few weeks away from mass distribution of the COVID-19 vaccine.

Biden campaigned in Michigan on Saturday for the first time with former President Obama. Obama told the crowd that people could choose "change," choose a better America, and that Biden would control the pandemic. Biden tweeted an attack on Trump's handling of the pandemic, saying, "President Trump has no plan to deal with the pandemic. He has abandoned you and your family. He will only numb us in the face of 230,000 deaths."

Regarding the election results, Trump predicted on Saturday that the election results would not be revealed next Tuesday, warning that "you will wait for several weeks," and hinting that "very bad things" could happen during the counting of votes in various states in the days following Election Day.

US Stimulus Package Stalled

Negotiations between the White House and Democrats on a new stimulus package worth about $2 trillion have stalled, with Trump and House Speaker Pelosi blaming each other.

The White House increased its proposed new stimulus package to $1.9 trillion, but this still falls short of the $2.2 trillion plan passed by Democrats in the House.

On Tuesday, US President Trump admitted that a COVID-19 relief agreement may not be reached before the November 3 election due to the White House's inability to bridge the gap between Senate Republicans and House Democrats.

Trump said the White House would approve a large relief plan after the election. "After the election, we will have the best economic stimulus package you have ever seen."

Trump also condemned House Speaker Pelosi for wanting to delay the stimulus package until after the election. Trump said Americans deserve a stimulus package, but House Speaker Pelosi rejected the Covid-19 relief plan.

Trump said: "We have always been willing to negotiate because we want to help the people, but Pelosi only cares about rescuing those poorly managed and crime-ridden Democratic cities and states."

House Speaker Pelosi responded: "His words only make sense if the president can get McConnell to take his hand off the pause button." This is seen as an allusion to the Republican-controlled Senate's unwillingness to accept a larger-scale relief plan.

Senate Majority Leader McConnell and Pelosi have not reached an agreement on how to deal with the virus in recent months. McConnell said he hopes to resolve the issue "early next year" with legislation "specifically targeting struggling small businesses and hospitals dealing with a second wave of coronavirus."

Pelosi said she expects Congress "to certainly do something at the beginning of the new president's term." But the California Democrat told MSNBC, "We don't want to wait that long because people are in need." The winner of the election will be sworn in on January 20, and Pelosi said she believes Democratic candidate Biden will be sworn in on that day.

Meanwhile, US President Trump is pushing for the passage of an economic stimulus package even faster than the top leaders of the Senate Republicans and Democrats. Trump told reporters on Friday, "We will implement a huge economic stimulus plan immediately after the election."

The COVID-19 epidemic is raging back in Europe and America.

Global weekly new COVID-19 cases exceeded 500,000 for the first time, and France and Germany are preparing to re-enter a near-total lockdown to control the worsening spread of the coronavirus before the holidays.

British Prime Minister Johnson announced on Saturday that England will implement a second national lockdown due to the spread of the coronavirus in the UK. In order to curb the spread of the virus, England will close all non-essential businesses for the next four weeks, but schools will remain open.

Johnson said at a press conference in London that people will be ordered to stay at home except for essential purposes such as education, medical care, or buying groceries. Bars and restaurants must close, except for takeaways.

Some industries that cannot work from home, such as construction and manufacturing, will continue. He said the lockdown will take effect next Thursday (November 5) and end on December 2.

Johnson said: "It's time to act, because there is no other choice." He said that during the lockdown, the British government will extend its financial assistance program for furloughed employees.

On Friday, the United States reported 99,321 new COVID-19 cases, breaking the record set just a day earlier, with the epidemic worsening in almost every corner of the United States.

An analysis of data compiled by Johns Hopkins University by CNBC shows that as of Friday, cases in 43 states have increased by 5% or more, and the epidemic is currently at its third peak. Data from Johns Hopkins University shows that the United States currently reports more than 9 million COVID-19 cases, an increase of 1 million in just two weeks, from 8 million on October 16 to over 9 million on October 30.

Over the past week, the United States has averaged about 78,738 new cases per day, the highest seven-day average, an increase of nearly 25% from a week earlier. According to Johns Hopkins University data, the five days with the highest number of reported cases were all recorded in the past eight days.

According to USA Today, the growth rate of confirmed cases in the United States on Thursday has exceeded 1 case per second, which is the first time since the outbreak, meaning that on average, a new confirmed case is added every 0.976 seconds.

Former FDA Commissioner Scott Gottlieb said in an interview with CNBC on Friday that the COVID-19 epidemic across the United States is accelerating.

Former FDA Commissioner Scott Gottlieb said: "You can see that the current epidemic curve in the United States is very steep. I think the growth rate of new cases has accelerated, and the doubling time of confirmed cases has been shortened to 80 days. The outbreak rate across the United States is starting to accelerate."

"You will see cases start to accelerate in the coming weeks," he said, predicting that the peak of the surge in US cases will be around Thanksgiving. He said: "December may be the toughest month."

Market Outlook for Next Week

Ahead of the US election on Tuesday (November 3), the overall sentiment in the gold market next week remains bullish; however, the results of Kitco News' gold survey released on Friday show that retail investors are much more cautious due to the prevailing uncertainty surrounding the election.

Among analysts on Wall Street, many are looking beyond Tuesday's election, focusing on long-term fundamentals and the need for more stimulus as the COVID-19 pandemic continues to impact the global economy.

Ole Hansen, head of commodity strategy at Saxo Bank, said: "I think 48 hours after the election is over, as the pandemic returns to the spotlight, you will see gold prices rise. Whoever is elected, this virus will continue to damage the economy, and the economic deterioration will mean that the government must act. At this point, the US election will not change the rules of the game, nor will it change the strong fundamentals of the gold market."

Eighteen analysts participated in the survey this week. A total of 12 analysts (67%) expect gold prices to rise next week; meanwhile, 2 analysts (11%) believe gold prices will fall, and 4 analysts (22%) believe gold prices will consolidate.

Interestingly, ordinary investors are much less bullish on gold than Wall Street. The gold market continues to struggle to attract retail interest, and the participation rate in Kitco News' weekly online survey remains relatively low, at its lowest level in nearly a year.

In the past week, 1,138 people participated in the online survey. Of these, 588 (52%) said they were bullish on gold next week. Another 380 (33%) said they were bearish, and 179 (15%) were neutral.

In stark contrast to the Kitco gold survey results, FX168's weekly financial market survey shows that analysts and traders are mostly bearish on the outlook for gold next week. Among the traders and analysts who participated in the weekly financial market survey, 60% were bearish on gold, 26.7% were bullish, and the remaining 13.3% expected consolidation.

Analysts say the gold market is holding its breath ahead of one of the most volatile weeks of the year.

In the first week of November, people will not only see the most anticipated event of the year—the US election—but also the Federal Reserve's interest rate decision and some key data, including US employment data for October.

Next Tuesday, Americans will choose their leader for the next four years: Biden or Trump? Currently, Wall Street's concern isn't who will occupy the White House, but rather the need for a clear victor. Otherwise, the market could experience the negative impact similar to the highly controversial 2000 election between George W. Bush and Al Gore.

In addition to next Tuesday's election, the market will also digest a series of important events, including the Federal Reserve's interest rate decision next Thursday.

Analysts expect the Federal Reserve to continue emphasizing the need for fiscal stimulus at next week's meeting. The Fed is expected to maintain a 'wait-and-see' attitude but may acknowledge the surge in US COVID-19 cases and point to 'downside risks to the outlook'.

“The Fed (likely) will retain its dovish stance at Thursday's Federal Open Market Committee (FOMC) meeting, pledging to stand pat and provide more stimulus if necessary. We expect to see them reiterate that fiscal policy is the more effective tool currently,” said James Knightley, ING’s chief international economist.

The Reserve Bank of Australia will hold an interest rate decision meeting next Tuesday. Based on comments from RBA officials in recent weeks, especially Governor Lowe's views, the market widely expects the RBA to cut interest rates to 0.1%. Simultaneously, the RBA will also lower the target interest rate for three-year government bonds and the term funding rate for banks. It's anticipated that the RBA will expand its bond-buying program to include 5-year and 10-year government bonds to keep market interest rates and financing costs low. If the RBA links its increased stimulus measures to revised economic expectations, it would indicate that the RBA anticipates Australia may not achieve its inflation and employment targets within the next two years.

The Bank of England's meeting next Thursday could lead to more easing and a cautious outlook. Unfortunately, EU-UK trade negotiations are the biggest concern for the pound right now.

In terms of data, the US employment figures released next Friday will also be a focal point. According to market consensus, US job growth is expected to increase by 600,000 in October.

Other important data to be released next week includes the US PCE price index and ISM manufacturing PMI on Monday, US factory orders on Tuesday, the ISM non-manufacturing PMI and ADP employment data on Wednesday, and initial jobless claims on Thursday. Due to the concentration of other major events, the impact of this data on financial markets may be limited.