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Daily Market Recap - GOLD Rises on Weak Dollar
Gold prices are moving higher as we approach the end of the trading week as bullish momentum returns to the market thanks to a steep decline in the US Dollar. The US Federal Reserves reiteration of continuity in loose monetary policy and expectations of a new fiscal stimulus deal has helped prop up the bullion to the highest level in over a month.
Gold futures got a solid boost from the Fed‘s last policy update of 2020 on Wednesday after the FOMC’s meeting where the central bank said it will be maintaining interest rates near 0 percent and is committed to pushing inflation higher. Fed Chairman Jerome Powell insisted that rates will not be rising anytime soon, which gave gold bulls the added motivation to push prices higher.
Meanwhile, US Congress is making strides in reaching a covid-19 relief package worth upwards of 900 billion. The passage of this deal is expected in the coming weeks and is now getting steadily priced into the market. The deal is getting more attention lately as rising covid-19 cases have prompted the US government to implement further restrictions on businesses, threatening the fragile economic recovery process.
Todays price action in the gold market is following the expected pattern of gains amidst further talks of monetary stimulus from the Fed supporting longer-term prices while fiscal stimulus discussions helping to cap the downside in the near term.
From a technical perspective, the main trend in gold is intensifying to the upside despite failing to hold above the psychologically significant 1,900 per ounce mark. That said, bulls may look to clear that level in the coming session as we notice a ramp-up in buying demand. Should buyers manage to break the 1,900 level, we may experience an acceleration towards the next significant target of 1,962.27.
(Chart Source: Tradingview 17.12.2020)
On the downside, dips should be contained above the 1,861.77-support level in the coming session, with stronger support to be found around the pivotal 1,852 handle. Some degree of mean reversion could weigh on gold prices in the near term, with sellers ultimately targeting the 1,850 level in the longer run.
Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.
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