Welcome back to another week,
Gold prices closed at 1,950.91, after placing a high of 1,960.36, and a low of 1,935.55. On Friday, prices for the precious metal moved to the highest level since Sept 17, based on the Democrat’s lead in the US election. The chances for Biden’s victory increased on Friday, and this rekindled the hopes of a massive economic stimulus, weighing on the US dollar and ultimately supporting the gold prices.
Prices for the yellow metal rose by almost by 4% this week, on the back of the weak US dollar, during the uncertainty regarding the winner of the US elections. However, Democratic Joe Biden’s lead put that uncertainty to rest, and investors are starting to buy gold, in the hopes of a coronavirus relief bill being passed. however, the rivals aligned with the defeated Donald Trump, and promised to fight any plans related to the stimulus package.
On Friday, the House Speaker and top Congressional Democrat, Nancy Pelosi, said that her immediate priority was to persuade the Trump administration to resume the COVID-19 stimulus talks that had been interrupted by the election. She said that she was calling on the administration to come back to the table, as Congress is committed to passing an Omnibus Appropriations bill for the pandemic. She said that this was necessary to stop the pandemic from killing hundreds of thousands of people and infecting millions more.
However, the top Senate Republican, Mitch McConnell, said that he would continue to fight Pelosi’s plan for a larger stimulus. He pointed to economic statistics and said that a 1% drop in the unemployment rate only indicated a need for a smaller stimulus package. He added that he has been adamant, for the last few months, that a smaller package would be more appropriate, rather than throwing in another $ 3 trillion at this time.
The coronavirus has infected more than 9.6 million people in the USA, and over 233,000 have died from it since the pandemic started. The rising number of coronavirus cases also played an essential role in the recent rally of gold to its highest levels in six weeks.On the data front, at 18:30 GMT, the US Average Hourly Earnings for October came in, showing a decline to 0.1%, against the expected 0.2%, and weighing on the US dollar, which added to the the gains in gold. The Non-Farm Employment Change for October rose to 638K, against the expected 595K, boosting the greenback. The Unemployment Rate from the US for October declined to 6.9%, from the projected 7.7%, lending support to the US dollar. At 20:00 GMT, the Final Wholesale Inventories for September came in at 0.4%, against the expectations of -0.1%, putting pressure on the US dollar and pushing gold prices even higher.
Furthermore, over the weekend, the counting of the votes was finalized at last, making Joe Biden the 46th president of the United States, after defeating Donald Trump in a landslide victory. The leader of the Democratic Party, Joe Biden, won 290 Electoral College votes against Republican Donald Trump’s 214, therefore winning the presidency.
The markets have already priced Biden’s victory; a rally in gold prices can be expected in the coming days, due to increased hopes for a larger stimulus package.
Daily Technical Levels
Pivot Point: 1,934.43
Trading in the precious metal, gold, is sharply bullish, within the 1,964 range, having soared upwwards from the 1,949 level. Gold may find its next resistance at around 1,973; however, the bullish bias remains dominant, especially due to the bullish engulfing candle formed on the 2-hour timeframe. The MACD is also expending a bullish crossover, confirming the upward movement in gold . Gold might find support at around 1,951, with the support level of 1,937. The bullish bias could remain strong until the 1,973 resistance level today. Good luck!