Good morning fellas,

The gold prices closed at 1,897.50, after placing a high of 1,899.11, and a low of 1,875.50. Overall, the movement of gold remained bullish throughout the day. Gold prices extended their gains of the previous day, rising for the second consecutive day on Tuesday, on the back of the weakness of the US dollar and increasing hopes for additional stimulus measures from US Congress.

On Tuesday, the CEO of the New York Federal Reserve, John C. Williams, said that, despite the coronavirus-induced recession, the US economy was healthier than expected. He also said that the economy would take about three years to regain its strength and return to its pre-pandemic levels.

He projected that the employment numbers would need three years to get back to normal, and maximum employment levels should be reached as soon as possible, in order for the economy to recover.

Meanwhile, the president of the Philadelphia Federal Reserve, Patrick Harker, said on Tuesday that the economic recovery in the United States depends on people following the SOPs. He said that the development of vaccines and slowing the spread of the virus, through the wearing of masks by American citizens, will play an important role in the economic recovery.

Harker added that, despite the economic growth being faster than expected since the recession last spring, a sustained decline in the rate of new infections is still needed for growth. Harker believes that the decline in the spread of the infection is due to the use of masks, especially indoors.

On the US stimulus aid package front, Harker said that unemployed workers and small businesses, along with others that were hit hard by the pandemic, needed a new government aid package, and federal officials should provide it. He proposed that at least another $ 1 Trillion in fiscal stimulus should be provided, in order to prevent the GDP from falling further.

On the other hand, the Vice Chairman of the Federal Reserve, Richard Clarida, said on Tuesday that the Fed will not increase the interest rates until the labor market recovers completely. He also said that rates will not be raised until the inflation target of 2% has been met and the target has been surpassed for some time.

However, the Central Bank of the United States has already projected that these conditions will not be met until 2023. Dovish comments by Fed officials on the day caused a slide in the US dollar, which pushed the yellow metal prices onto the upside.

Meanwhile, the latest comments by US Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi supported the stimulus environment. On Tuesday, Pelosi said that she hoped to reach a deal with the White House over the coronavirus aid package by this week. Pelosi’s spoke after she met with Steven Mnuchin, and her comments supported the optimism that the US will announce the next round of stimulus measures soon.

On Monday, Pelosi said that Democratic lawmakers had unveiled a new $ 2.2 trillion coronavirus relief package. Market traders cheered this news and started buying gold, pushing the prices close to the 1,900 level.

Meanwhile, the US data was mixed on Tuesday, but it had little impact on the US dollar and failed to provide any momentum for the yellow metal prices. Furthermore, the US-China tensions continued to increase, as US President Trump started flaring on China, ahead of the US Presidential election, in order to secure his position for the second term. Besides this, China’s chances of meeting its US purchase targets, as set out in the Phase 1 trade deal between the world’s two largest economies, are also decreasing day by day, which also supported the risk-off market sentiment and safe-haven gold prices.

Another factor that supported the gold surge on Tuesday was the rising fears relating to the coronavirus pandemic, after it was reported that the virus had taken more lives than malaria, HIV, influenza and cholera over a period of 10 months. It has also caused global economic destruction and has disturbed the daily life routine of every individual. The fears increased due to the news that the global death toll from coronavirus infections has passed the one million mark, and that the disease is still spreading quickly.

Market traders are now keenly awaiting the first US Presidential debate between Donald Trump and Joe Biden, which will start late tonight. Furthermore, Steven Mnuchin and Nancy Pelosi will also provide fresh updates on the US stimulus package on Wednesday, which is already supporting the yellow metal prices, due to the optimism it is generating.

• Daily Technical Levels:
  Support              Resistance
  1,859.54              1,896.64
  1,836.77              1,910.97
  1,822.44              1,933.74
  Pivot Point:        1,873.87

The precious metal, gold, is trading at the 1,882 level, and it has formed a bearish engulfing candle on the hourly timeframe. The overbought metal is likely to trade with a bearish bias, in order to complete a 38.2% Fibonacci retracement level. On the lower side, gold may find support at the 1,876 level, with the resistance becoming the support area. At the same time, the bearish breakout at the 1,876 level could lead gold prices towards the 1,872 level. A bearish bias dominates today. Good luck!