Good morning, traders,

The gold prices closed at $ 1,942.08, after placing a high of $ 1,945.62 and a low of $ 1,899.57. Overall, the movement of the precious metal remained bullish throughout the day. GOLD extended its gains for the 7th consecutive session on Monday, storming to a record high of $ 1,945 per ounce, even surpassing its gains of September 2011. The worsened ties between the US and China, mounting numbers of coronavirus cases across the US and a strong selling bias around the US dollar, coupled with ultra-low interest rates and the call for more stimulus packages from governments, gave gold prices a massive push on Monday. The US Dollar Index fell, hitting a two-year low, due to the US-China tensions and concerns about the US economy, as coronavirus infections are rising continuously in the world’s largest economy.

The tensions between the US and China got an upgrade after China took over the US consulate premises in the city of Chengdu in southwest China on Monday. China ordered the US consular facility to be vacated, in retaliation for the US having shut down their consulate in Houston last week. US Secretary of State Mike Pompeo said that Washington and its allies must use “more creative and assertive ways” to force the Chinese Communist Party to change its ways.

Furthermore, the hopes for renewed coronavirus aid package by US Senate Republicans also kept the gains higher for the yellow metal. It is expected that the US Fed’s meeting, which starts on Tuesday, will unveil a $ 1 trillion accommodative policy shift.

Hopes for a quick recovery of the US economy have become dim, as coronavirus infections are weighing heavily on the growth signs. This means that the economy will surrender without new government support, such as some of the earlier steps, like introducing more jobs or enhancing jobless benefits within the economy. The need to announce jobless benefits is crucial for US economic recovery, as the current package is due to expire this month.

Investors hope that US Congress will agree on a deal before the summer recess, as Pompeo said that the package would contain extended unemployment benefits, with a 70% wage replacement. 

However, the Democrats, who hold the majority in the House of Representatives, wanted the enhanced unemployment benefit of $ 600 per week to be extended. They also wanted a much bigger stimulus, compared to the Republicans’ $ 1 trillion plan.

Meanwhile, US deaths from COVID19 rose for the third week in a row, to more than 6300 Americans in seven days by Sunday. However, the number of new cases has fallen by 2%, dropping for the first time after a continuous rise for five weeks in a row.

However, some good news regarding the development of a vaccine has raised hopes for global economic recovery, as phase-3 trials of a candidate vaccine in the US, with an expected enrollment of 30,000 volunteers, were started on Monday. The vaccine was co-developed by Moderna and the National Institute of Allergy and Infectious Diseases.

Daily Technical Levels

Support Resistance

1925.14 1976.99

1891.37 1995.07

1873.29 2028.84

Pivot point: 1943.22

The precious metal, GOLD , soared sharply, placing a new high at around the 1,988 level and dropping suddenly immediately thereafter. It is now trading at the 1,936 level. Gold could find immediate support at the 1,930 level now, and a bearish crossover below this level could lead the prices towards the 1,914 mark. While the immediate resistance remains at 1,943 and above, the 1,965 level will extend major resistance. A bullish bias seems dominant above the 1,930 level. Good luck!