Daily Brief, December 10 – Everything You Need to Know About Gold Today!

Posted Thursday, December 10, 2020 by
Arslan Butt • 3 min read
Good morning traders,
Prices for the precious metal, GOLD, closed at 1,839.77, after placing a high of 1,870.90, and a low of 1825.29. With no progress regarding any additional US fiscal stimulus to boost the economy, which has been hard-hit by the coronavirus pandemic, the gold prices fell on Wednesday, due to the strength of the US dollar compared to other major currencies, . The Trump administration raised the level of uncertainty during the fragile stimulus negotiations, by proposing an economic relief package that would offer far fewer unemployment benefits than the package proposed by a bipartisan group of lawmakers.

According to the bipartisan proposal released by a group of moderate lawmakers last week, Congress should deliver new federal unemployment benefits for tens of millions of jobless Americans, to the tune of $ 180 billion. This support would be enough to fund federal supplementary unemployment benefits of  $ 300 per week and extend various unemployment programs that are set to expire at the end of the year.

In contrast, Steven Mnuchin has submitted a plan to provide about $ 40 billion in new funding for unemployment benefits. This plan would extend the benefits that are due to fall away, but it would not include any supplementary federal benefits, which means that millions of jobless workers would not receive additional federal assistance.The new White House proposal was a sharp rejection of the bipartisan effort that brought Democrats and Republicans closer to a compromise on a legislative package, due to the signs that the US economy was suffering badly amid the rising number of coronavirus cases.

In such a situation, the plan submitted by Mnuchin was a non-starter for the Democrats who, since the CARES Act was passed, have been saying that the federal government should provide additional income support for workers who have been laid off. The proposal by the White House was strongly criticized in a joint statement by House Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer.

Meanwhile, on Wednesday, the US House of Representatives approved a one-week extension of federal government funding, that would give lawmakers more time to agree on a massive coronavirus relief package. However, Senate Majority leader Mitch McConnell said that lawmakers were still looking forward to a relief package.

These developments raised the uncertainty surrounding the US stimulus package and supported the US dollar, ultimately weighing heavily on gold prices on Wednesday. Furthermore, the losses in the gold prices were further increased after US health officials offered a glimmer of hope when they announced that vaccinations could begin as soon as this weekend, and that the states have escalated plans for distribution of the vaccine.

Moreover, the risk sentiment deteriorated after the latest news from Great Britain, where the vaccition process has already started. The optimism over the coronavirus vaccine diminished after Britain’s pharmaceutical regulator warned people with significant allergies against vaccination with Pfizer-BioNtech’s coronavirus vaccine, after two people suffered adverse reactions.

This news from the UK helped to limit losses in the GOLD prices on Wednesday, as this news adversely affected the optimism that has lifted the risk sentiment on the market. On the data front, at 20:00 GMT, the Final Wholesale Inventories for October were released, showing a rise to 1.1% against the expected 0.9%, which put pressure on the greenback. The JOLTS Job Openings for October also increased, coming in at 6.65M against the projected 6.30M, which boosted the US dollar and added to the losses in the GOLD prices on Wednesday.

Daily Technical Levels
Support                 Resistance
1,819.64                1,865.59
1,801.37                1,893.27
1,773.69                1,911.54
Pivot Point:         1,847.32

In the absence of any additional US fiscal stimulus to support the economy through the coronavirus pandemic, the GOLD prices fell, due to the strength of the US dollar against other major currencies. GOLD is currently trading at the 1,840 level, facing immediate resistance at 1,851, and support at 1,833 and 1,826. The US Inflation data may help determine further GOLD trends today; however, the technical side seems bearish at the moment. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
0 0 vote
Article Rating
Notify of
Inline Feedbacks
View all comments