Daily Brief, December 24 – Everything You Need to Know About Gold
Arslan Butt • 2 min read
Good morning traders,
The prices for the precious metal, gold, closed at 1,873.09, after placing a high of 1,878.44, and a low of 1,856.97. Gold prices rose on Wednesday, after placing losses for three consecutive days, amid threats from Donald Trump that he would not sign the US pandemic relief bill, which triggered a decline in the US dollar. On Wednesday, the US dollar index dropped by 0.2% against its rival currencies, after Trump’s threat not to pass the coronavirus recovery bill. This resulted in an increase in the demand for the precious metal. US President Trump urged Congress to amend the $ 900 Billion coronavirus relief bill, tripling the stimulus payments to Americans. Trump called the package a disgrace and said it was full of wasteful items.
In the original $ 900 billion package, Americans will receive payments of $ 600 per person, which means four person-families will receive $ 2400, but Mr. Trump said that figure should be increased to $ 2000 per person or $ 4000 couple. However, Trump refrained from saying specifically that he would veto the bill; instead, he has asked Congress to eliminate the wasteful and unnecessary items from the legislation immediately; otherwise, the next administration will have to deliver the coronavirus relief package.
Most legislations that come from Congress require the approval of the President before becoming law. If the President rejects this bill, it would require at least a two-thirds majority in each chamber, including the House of Representatives and the Senate, to override the veto. Over this last-minute demand from Trump, to boost direct payments to Americans, the gold prices started to rise a little, as investors awaited the response of Republicans, since the House of Senate and the House of Representatives have reached an agreement over this bill after months of talking.
On the data front, at 18:30 GMT, the Core Durable Goods Orders for November came in as expected at 0.5%. For November, the Core PCE Price Index dropped to 0.0% from the expected 0.1% and weighed on the US dollar, adding gains to the gold prices. The Durable Goods Orders for November rose to 0.9%, from the projected 0.6%, boosting the US dollar. The Personal Income dropped to -1.1%, against the forecasted -0.3%, which put pressure on the greenback. Personal Spending in November also dropped to -0.4%, against the estimated -0.2%, weighing on the US dollar and supporting the upward trend in gold prices.
Last week, the Unemployment Claims declined to 803K, against the forecasted 882K, lending support to the US dollar. At 19:00 GMT, The Housing Price Index for October came in, showing an increased to 1.5%, against the expected 0.6%, also supporting the greenback. At 20:00 GMT, the New Home Sales for November came in, showing a decline to 841K, against the projected 994K, which weighed on the US dollar and added to the gains in the yellow metal. The Revised UoM Consumer Sentiment in December came in line with the projections of 80.7. The Revised UoM Inflation Expectations in December were also in line with the expectations of 2.5%. Another reason behind the increasing gold prices is the coronavirus mutation that has prompted many nations to close their doors to the United Kingdom and dented hopes of a worldwide economic recovery from the pandemic.
Daily Technical Levels
Pivot Point: 1,874.47
The market hasn’t changed a lot in the wake of the Christmas holidays, as there is a lack trading volume and volatility. Gold is gaining support at the 1,858 level, along with resistance at the 1,876 and 1,886 levels. We can expect gold to bounce off over 1,856, while a bearish breakout at 1,856 could lead the gold price towards 1,844. Good luck!