Good morning traders,

The precious metal GOLD prices closed at 1,912.40, after placing a high of 1,955.56, and a low of 1,882.10. Overall, the movement of gold remained bearish throughout the day. The yellow metal dropped more than 3% on Monday, to its lowest level in more than a month, on the back of a stronger dollar, as investors placed bids over the uncertainty related to a new US fiscal stimulus package.

Gold prices should have surged in this time of uncertainty, but market participants started to sell off assets and buy the US dollar, due to the greenback’s safe-haven status. The US Dollar Index rose by 0.8% on Monday, which was the highest daily percentage gain in the US dollar against its rival currencies since March 19.

Wall Street’s main indexes hit their lowest levels in nearly seven weeks on Monday, as the chances of Congress coming to an agreement on the stimulus package in the near future were decreasing day by day. The US Congress has remained deadlocked over the size and shape of the fifth coronavirus stimulus bill for many weeks, although the matter needs to be resolved quickly, as the number of coronavirus cases is increasing constantly.

The first round of relief funds, which included an additional unemployment benefit of $ 600 per week and the $ 1,200 checks and Paycheck Protection Program, which encouraged companies not to lay off workers, helped the US economy through the pandemic.

However, since the CARES Act expired at the end of July, the political leaders are still miles away from reaching a deal on the size of the next measure. Meanwhile, President Donald Trump continued using a series of executive actions to help with smaller unemployment benefits.

There has been some improvement in the economy, but at a slower rate, because, although the jobless benefit claims beat the expectations for the first time in September, the numbers are still historically high. The growth in Retail Sales was also less than expected, which was compounded by the decreased spending in recent weeks.

The pace of recovery is slow, and according to the Central Bank of the United States, to keep it going, a new stimulus measure is desperately needed. Jerome Powell says that almost 11 million people are out of work, due to the pandemic, and Congress should take the necessary steps to help the US economy to fight the effects of this pandemic. These comments were made during last week’s press conference; however, another speech by the Fed Chair is awaited with great anticipation, during the late session on Tuesday.

Ahead of this speech, the investors also remained cautious, and started selling gold, on the back of expectations that Powell will put pressure on the US Congress to finally pass the fifth round of stimulus measures.

Furthermore, the US Center for Disease Control and Prevention has warned that the coronavirus can be spread through airborne particles. The CDC warned that poorly ventilated places increase the risk of the virus spreading. As the safe-haven appeal affected the US dollar more than the yellow metal on Monday, the US dollar surged, and gold remained stressed, falling to its lowest level since August 12.

Daily Technical Levels

Support              Resistance

1,884.71               1,961.31

1,847.18               2,000.38

1,808.11               2,037.91

Pivot Point:       1,923.78

The GOLD prices fell sharply, from 1,935 to 1,888, in the wake of the hawkish Fed Chair speech. At the moment, the yellow metal is bouncing off, to complete a 38.2% Fibonacci retracement at 1,914, and above this, the next resistance remains at 1,921 and 1,930. Let’s keep an eye on the 1,907 mark today, as trading in gold could be bullish above this and bearish below the same level today. Good luck!