Good morning traders,

Prices for the precious metal, GOLD, closed at 1,862.11, after placing a high of 1,868.56, and a low of 1,821.88. The gold prices resumed their upward momentum on Monday, based on signs that US lawmakers are finally closing in on a fiscal deal to keep the government open and continue with paycheck protection for millions of Americans who are in financial need, due to the coronavirus.

Last week, the 3.3% rally in gold prices was due to signs that US Congress might reach an agreement on the $ 908 billion coronavirus stimulus bill soon. The rebound in gold prices helped to erase a large portion of the previous week’s 5% losses.

The recent surge in gold prices on Monday was triggered by Congress’ aim to scrape together a coronavirus relief package before the end of this week, thereby preventing a lapse of benefits, which would increase the chances of millions of Americans falling into dire financial difficulties at the end of the year.

The US Lawmakers aim to pass pandemic aid and spending legislation before the government shuts down on Saturday. In order to do so, they would have to resolve several sticking points, so that they are able to meet the deadline quickly.

On Monday, a bipartisan group of US lawmakers hoped to release a more detailed outline of the $ 908 billion in aid proposed on Monday, as it is responsible for legislative tax. The House of Representatives, which is under the control of Democrats, backed the plan for an emergency relief bill, as numbers of coronavirus infections have surged, putting a heavy burden on hospitals across the country. Meanwhile, the Republicans who have the majority in the Senate, have indicated that they will support the measure, but they refrained from specifying the amount.

These developments surrounding the US stimulus measure for the coronavirus pandemic helped gold prices to rise on Monday. Gold emerged from one of its massive sell-offs, driven by the breakthroughs in coronavirus vaccines, along with the chances of their availability before Christmas, which sent the money in the markets into safe-havens.

Despite the continuous risk sentiment in the market, gold prices rallied on Monday, amid the talks of a new US coronavirus stimulus effort. Another factor involved in the rising prices for the precious metal, was the widespread second wave of the coronavirus in the United States. The US has seen its biggest hospitalization rate ever, with more than 104,000 patients hospitalized on a single day. New coronavirus cases in the US have also increased to an alarming level, and this is weighing on the US dollar, further boosting the gold prices, in turn.

Meanwhile, the rise in gold prices could also be attributed to the latest US sanctions on Chinese firms. The US imposed financial sanctions and a travel ban on 14 Chinese officials, due to their alleged role in disqualifying elected opposition legislators in Hong Kong.

Hong Kong’s Beijing-backed government expelled four opposition members last month. In response, the US imposed sanctions on 14 Chinese officials and blocked any assets the officials might have within the US. These sanctions added to the safe-haven demand in the market and supported the gold prices.   

Daily Technical Levels

Support               Resistance

1,836.10               1,841.45

1,833.75               1,844.45

1,830.75               1,846.80

Pivot Point:         1,839.10

GOLD is trading with a bullish bias at around the 1,867 level, and it could head higher until the next target level at the 1,893 mark. Continuation of an upward trend could lead the gold prices into the 1,900 range. However, gold is now overbought, and it could drop until the 1,856 support area before bouncing off further. Good luck!