Gold Enjoys Support Amid Possibility of More Fiscal Stimulus

Gold is trading bullish on Tuesday even as the US dollar strengthens, reversing losses after falling to a six-week low during the previous

Written by: Arslan Butt • Tuesday, January 19, 2021 • 1 min read

• Last updated: Tuesday, January 19, 2021

Gold is trading bullish on Tuesday even as the US dollar strengthens, reversing losses after falling to a six-week low during the previous session, as markets worry about the economic impact of the coronavirus driving the need for more stimulus measures. At the time of writing, GOLD is trading at a little above $1,837.

Gold prices weakened on Monday after the US dollar surged to the highest level seen in four weeks, on the back of rising hopes that President elect Joe Biden could unleash more stimulus to support economic recovery in the US. The yellow metal shares a negative correlation with the greenback, as a stronger dollar makes it more expensive for holders of other currencies to invest in the safe haven asset.

In addition to hopes for more stimulus in the US, the gold also enjoys support from reports about Eurozone’s finance ministers agreeing to roll out more fiscal stimulus to prop up their economies through the coronavirus crisis. Meanwhile, the IMF has also cautioned that the global economic outlook faces high levels of uncertainty and could need more resources and aid to help out countries with significant debt.

Despite the rollout of the COVID-19 vaccine across some countries around the world, fresh infections continue to rise, forcing countries to impose more lockdowns and restrictions. More lockdowns are expected to drive deeper economic damage and delay any hopes for the global economy to rebound even after the pandemic is brought under control through successful vaccinations.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.