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Daily Brief, Dec 07 – Everything You Need to Know About Gold Today!

Posted Monday, December 7, 2020 by
Arslan Butt • 3 min read

GOLD prices closed at 1,838.40, after placing a high of 1,848.14, and a low of 1,829.14. The prices for the precious metal, GOLD, dropped on Friday, after placing gains for three consecutive days, ending the week with the best score in the past four weeks, as investors hedged against the weak US dollar and bought the yellow metal, amid the renewed emphasis on the necessity for a new US coronavirus fiscal relief bill.

GOLD saw its most brutal sell-offs this month, afters news of the coronavirus vaccines hit the markets; investors started to run towards safe-havens after the potential availability of those vaccines before Christmas became known. The yellow metal has lost about 6% this month, falling into $ 1,700 territory, amid the notion that the spread of the coronavirus would soon come to an end, thanks to the vaccines and therapeutics, and this ultimately resulted in investors transferring money towards stock markets and other risk assets.

Despite the continuous improvement in risk sentiment, gold, as a haven, rallied again on Friday, after the talks on the new US coronavirus package, which weakened the US dollar instead and helped to raise the yellow metal prices again. The US Dollar Index (DXY) fell by more than 1% on Friday, to a 6-year low of 90.47.

Initially, US Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in March, to the tune of about $ 3 trillion. It included paycheck protection for workers, loans and grants for businesses, and other personal aid for citizens and residents who qualify. However, for many weeks now, the Democrats and the Republicans have been locked in a bitter debate on a successive CARES Act stimulus package. Their differences lie in the size of the next stimulus, as thousands of Americans are jobless.

Meanwhile, last week, the stalemate finally broke after Republicans and a bipartisan group of Democrats proposed a $ 908 billion relief package during negotiations between the two sides. It raised the expectations that a massive stimulus package was on its way and weighed on the US dollar, ultimately helping the gold prices.

On the data front, at 18:30 GMT, the Average Hourly Earnings came in, reflecting an increase to 0.3%, against the expected 0.1%, which provided support for the US dollar. The Non-Farm Employment Change dropped to 245K, against the projected 480K, weighing on the greenback. The Unemployment Rate dropped to 6.7%, against the expectations of 6.8%, boosting the US dollar. The Trade Balance from the US came in at -63.1B, against the forecast of -64.7B, also supporting the US dollar. At 20:00 GMT, the Factory Orders for November rose to 1.0%, against the projection of 0.8%, also giving the greenback a boost.

Despite the mixed US macroeconomic data, the lower-than-expected job creation by the Labor Department of the US exerted heavy pressure on the already falling US dollar and supported the upward momentum of the  GOLD prices.

On the other hand, the rising number of coronavirus cases and the poor situation regarding the handling of the pandemic by state governments, resulted in the hospitalization rate in the US hitting another record high on Sunday. About 101,487 patients were reported to have been hospitalized in the US in a single day, which exerted heavy pressure on the nation’s hospitals and health care system. Moreover, the records showed that the US had recorded about 1 Million new coronavirus cases in just five days this week, from Tuesday to Saturday, with 1,000,882 cases being reported in this time. This rapid spread of the coronavirus in the world’s largest economy put pressure on the local currency, the US dollar, ultimately adding to the strength of the GOLD prices.

Daily Technical Levels
Support              Resistance
1,829.40            1,850.10
1,817.70             1,859.10
1,808.70            1,870.80
Pivot Point:      1,838.40
GOLD is trading sideways, at the 1,841 level, with an immediate resistance level at 1,847. This is the same level that worked as support a few days ago. For now, GOLD could exhibit a selling bias below the 1,847 level, while a bullish crossover at this level could extend the buying trend until the 1,883 mark. On the lower side, support could be found around the 1,828 level. We could be in for a choppy session. Good luck!
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