Daily Brief, December 01 – Everything You Need to Know About Gold Today!

Posted Tuesday, December 1, 2020 by
Arslan Butt • 2 min read

Good morning fellas,
Prices for the precious metal, GOLD, closed at 1,776.68, after placing a high of 1,789.85, and a low of 1,764.28. The gold prices extended their downturn on Monday, ending November with losses of almost 6%. November was the worst month for gold prices in four years, due to increased risk sentiment over the coronavirus vaccine news. With the rising hopes of economic recovery, the need to hedge against an economic collapse lessened, and money was diverted from safe-havens to riskier assets and cryptocurrencies.

Gold prices started to decline in mid-November after continuous announcements of successful coronavirus vaccine trials. On Monday, US Health Secretary Alex Azar said that if all went well, Americans could get their first shot of coronavirus vaccine before Christmas. Azar’s comments further boosted the risk-sentiment and weighed on gold prices.

Meanwhile, on Monday, Moderna became the second drug company to apply for emergency authorization with the US Food and Drug Administration, for use of their vaccine, in an effort to reduce the effects of the coronavirus. Furthermore, Pfizer and BioNtech, who had already filed for FDA approval earlier in November, sent the first mass shipment of its coronavirus vaccine to Chicago via United Airlines on Friday. This positive news from the drug companies supported the optimism regarding quick economic recovery and weighed heavily on the yellow metal prices.

On the other hand, most of the gold losses on Monday were reversed after the release of macroeconomic data from the US. At 19:45 GMT, the Chicago PMI figures for November were released, showing a decline to 58.2, against the projected 59.4 and weighing on the US dollar. At 20:00 GMT, the Pending Home Sales for October indicated a decline to -1.1%, against the forecast of 1.1%, also putting pressure on the US dollar.

From this data, it is evident that the second wave of the coronavirus, with constantly increasing numbers of infections in the US, which has forced many states to re-introduce lockdown restrictions, has succeeded in affecting manufacturing activities in the United States. One index from China’s manufacturing sector rose to a 3-year high on Monday, adding further strength to the risk sentiment and weighing on the precious metal.

Moreover, the briefing session for Congress to pass a new coronavirus stimulus bill began on Monday. Both President Donald Trump and President-elect Joe Biden have said that they want Congress to cut a deal. The Democrats and the Republicans have been battling over the size of the stimulus package for four months. The former has been championing a comprehensive package with unemployment relief, while the latter has been in favor of a smaller bill, with a narrow focus on helping businesses.

The start of this congressional briefing session has added some strength to the gold prices, whilst weighing heavily on the US dollar. The news of the resumed negotiations put the US dollar under fresh pressure and supported gold prices, allowing them to recover some of their early-day losses on Monday.

Daily Technical Levels
Support              Resistance
1,788.10             1,791.70
1,786.65             1,793.85
1,784.50             1,795.30
Pivot Point:       1,790.25

On the technical side, gold continues to extend a bearish bias, with gold trading in the 1,785 area, with support over the 1,757 level. On the 4-hour timeframe, gold has formed a small ascending triangle pattern, which is providing support for the precious metal around the 1,775 level, along with resistance at the 1,788 level. A bullish crossover at the 1,788 level could extend the buying trend until the 1,805 and 1,816 levels today. Good luck!

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