Daily Brief, December 02 – Everything You Need to Know About Gold Today! - Forex News by FX Leaders

Daily Brief, December 02 – Everything You Need to Know About Gold Today!

Posted Wednesday, December 2, 2020 by
Arslan Butt • 2 min read

Good morning traders,

The GOLD prices closed at 1,814.98, after placing a high of 1,817.26, and a low of 1,775.70. After suffering losses for two consecutive days, GOLD rose by almost 2.1% on Tuesday, due to the weakness of the US dollar and the resumption of talks over a US fiscal stimulus plan to relieve the effects of the pandemic.

On Tuesday, Federal Reserve Chairman Jerome Powell said that the outlook for the United States economy is extraordinarily uncertain, due to the rising numbers of coronavirus cases, which have taken a toll on the country’s economy.

In his testimony to the US Senate Committee on Banking, Housing and Urban Affairs, Powell said that the rise in the numbers of new COVID-19 cases, both in the US and abroad were concerning, and could prove challenging for the next few months. He said that a full economic recovery was impossible, until people were confident that it was safe to re-engage in a broad range of activities. However, Powell was positive over the recent news on the vaccine, as he expects significant challenges and uncertainties, including timing, production and distribution of the vaccine, along with the efficacy across different groups.

Meanwhile, several programs that were set by the Fed in March will expire at the end of the year. In response to this, Powell reiterated that these programs would help unlock almost $ 2 trillion in funds. The resumed talks on the US fiscal stimulus package for the pandemic added strength to the GOLD prices.

Furthermore, the outgoing Treasury Secretary, Steven Mnuchin, also testified before the Senate on Tuesday. Mnuchin urged the lawmakers to quickly pass a second stimulus bill, to provide follow-up to the relief authorized in March, stressing that the package should be modest. Besides this, a bipartisan group of lawmakers pushed for quick approval of a $ 908 billion coronavirus relief bill. GOLD prices gained traction after these reports relating to the US stimulus bill.

The US dollar was also weak on Tuesday, with the US Dollar Index (DXY) down by 0.6%, hitting its lowest level in a week, at 92.1.

On the data front, at 20:00 GMT, the eagerly awaited ISM Manufacturing PMI figures for November declined to 575, against the estimated 5.9, weighing on the US dollar. The fresh lockdowns in several American states, in an attempt to control the spread of the coronavirus, resulted in decreased manufacturing activity, which in turn weighed on the greenback and supported the upward momentum in GOLD prices.

For October, the Construction Spending rose to 1.3%, against the expected 0.8%, lending support to the US dollar. The ISM Manufacturing Prices for November also rose, coming in at 65.4, against the anticipated 65.0, also boosting the greenback. The Wards Total Vehicle Sales from the US dropped to 15.6M, against the expected 16.1M, which put pressure on the US dollar and supported the GOLD prices.

However, despite the 2% rebound in the GOLD prices, they were still $ 270 below the record highs of August, which took the future of GOLD close to $ 2,090. The fall in gold this year was just like its rise in 2020, which was unexpected and breath-taking.

Daily Technical Levels
Support              Resistance
1,789.36             1,830.66
1,763.88             1,846.48
1,748.06             1,871.96
Pivot Point:       1,805.18

GOLD is trading slightly bullishly, at the 1,816 level, having completed a bullish correction. For now, GOLD is facing immediate resistance at the 1,816 level, and closing of candles below the 1,816 level could extend the selling trend until the support level of 1,788. Alternatively, a bullish crossover at the 1,816 level could extend the buying trend until 1,831 and 1,842. Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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