Kitco/David Lin
Gold price has bottomed, $4k target for either Trump or Biden victory – Frank Holmes

Gold has traded sideways for the last few weeks, but the price action is forming a bottom, said Frank Holmes, CEO of U.S. Global Investors.

Despite market volatility ahead of the November presidential election, Holmes maintains his $4,000 price target.

“The bottom that you’re seeing in gold is like a perfect Miami beach bottom. Gold will go up and it will go down, the DNA of volatility you can measure over 20 trading days, 60 trading days, 12 months, it was up when we talked about a time for a correction in the beginning of August three standard deviations over 20 trading days. It’s now down one standard deviation,” Holmes told Kitco News.

Gold has trended down from its August highs and has not broken past above $2,000 an ounce mid-August.

Physical gold demand has historically picked up following the summer, Holmes said.

“It’s love season. It’s the seasonality of two wedding seasons in India, it’s the season of lights of Diwali, then we have Christmas, and it peaks for Chinese New Year,” he said. “It’s an auspicious time for the consumption of gold, and it’s most highly correlated with GDP per capita growth.”

Importantly, China and India’s GDP per capita has significantly increased over the past few decades, from over 5% of the world’s gold to 53%, Holmes noted.

The outcome of the presidential election would not move the gold price either way, Holmes said.

“Some are betting on blue, some betting on red, and I’m betting on gold,” he said.

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Fox Business/Jennifer Schonberger
Coronavirus will dictate U.S. economy’s path: Fed’s Williams

New York Fed President John Williams says that the outlook for the economy depends on the spread of the coronavirus and people’s behavior containing the spread—the latest Fed official to stress that the outlook for the economy remains highly uncertain at the mercy of the virus.

“This is not a standard recession and the economic future is inextricably tied to the spread of the virus, people’s behavior in containing that spread, and the development of vaccines and therapeutics,” Williams said.

Williams underscored the Fed’s new approach to policy – linking raising interest rates and other policy actions like buying bonds to economic outcomes on employment and inflation —  allows the Fed to respond to changes in the economy as they happen.

The head of the New York Fed’s comments come just as internal discussions amongst Fed officials at their policy meeting in September over how to communicate about setting future policy revealed differences. Several members of the central bank wanted to maintain current guidance on the Fed’s intentions.

They didn’t feel further “enhanced forward guidance” – tying raising rates to certain levels on inflation or unemployment – was needed now or would do much good now given that long-term bond yields, which influence borrowing rates were already so low. They were also concerned leaving rates near zero could hurt their flexibility on policy and could lead to the build-up of financial bubbles that would make it hard to achieve stable prices and full employment.

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Marketwatch/Ben Levisohn
The Stock Market’s Gain Wasn’t as Impressive as It Looked

The stock market had a great day. Anytime the indexes are all within spitting distance of 2% gains certainly qualifies. But today’s rise, as impressive as it was, couldn’t lift the S&P 500 above its resistance level. Until it does, there’s reason to doubt the rally.

Don’t get me wrong—the gains were impressive. The S&P 500 rose 1.7% to 3419.45, while the Dow Jones Industrial Average climbed 530.70 points, or 1.9%, to 28,303.46, and the Nasdaq Composite finished the day up 1.9% to 11364.60.

The problem: The S&P 500 got as high as 3426, just a touch below where its bounce failed during the middle of September. That level is now resistance, explains Instinet’s Frank Cappelleri. “The SPX’s high point today was 3,426, which was two points shy of that 3,428 resistance level from mid September. It’s also where bullish inverse H&S neckline resides. No breakout just yet, but it’s THIS close.”

It’s hard to predict what will come next. The market’s rise was spurred by tweets from President Donald Trump, who called for aid for airlines and small business, and $1,200 checks to be sent to Americans. Of course, the Dow slumped on Tuesday because he said he was calling off negotiations, so who knows what will come tomorrow? “That was a fairly abrupt and disorderly single-day turnaround,” writes RBC economist Tom Porcelli.

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