Daily Brief, Dec 28 – Everything You Need to Know About Gold Today!

During Monday’s Asian trading session, the yellow metal prices extended their overnight bullish streak, still flashing green around the $ 1,900 level, as US President Trump has now signed the critical and long-awaited coronavirus relief and spending package. This has undermined the US currency and provided some support for the gold prices. However, the bullish sentiment surrounding the prices for the precious metal was supported by the weaker US dollar, as the weaker dollar tends to make it cheaper for holders of other currencies to purchase the yellow metal. Let me remind you that the bullion prices have increased more than 24% so far in 2020, mainly due to its appeal as a hedge against inflation and currency debasement, amid unprecedented global stimulus measures to curb the impact of COVID-19.

Apart from this, the growing market worries about the B.1.1.7 strain of COVID-19 and the discovery of a second mutant strain of the virus also keep favoring the yellow metal bulls. The gold prices are currently trading at 1,890.60 and consolidating in the range between 1,879.39 and 1,900.32.

Despite the heightened worries over the rising number of coronavirus (COVID-19) cases, the market trading sentiment managed to maintain its overnight positive performance, remaining well-supported. This could be associated with the latest reports suggesting that US President Donald Trump has signed off on the latest stimulus measure, which in turn has boosted the investor’s sentiment and lent some support to the yellow metal prices, by undermining the safe-haven US dollar. It is worth mentioning that the package, that has finally been passed, includes direct payments to qualifying Americans, worth up to $ 600 per adult and child, a boost in weekly unemployment benefits, and funds for small-business aid and vaccine distribution.

Antoher reason for the gains in equity markets could also be attributed to the optimism over the rollout of vaccines for the highly contagious disease. This, in turn, is seen as one of the key factors that is capping any further upside momentum in the gold prices.

On the USD front, the broad-based US dollar failed to stop its early-day selling bias, still flashing red, as the progress in terms of the massive US government spending bill and COVID-19 relief measures tend to undermine the demand for the safest assets. Moreover, the losses in the US dollar could also be associated with lingering doubts over economic recovery from COVID-19 in the United States. However, the losses in the greenback kept the gold prices higher, as the price of gold is inversely related to the price of the US dollar. Meanwhile, by 12:09 AM ET (5:09 AM GMT), the US dollar index, which measures the greenback against a bucket of currencies, had dropped by 0.15%, to 90.112.

In contrast to this, the fears of rising numbers of COVID-19 cases in the US, the UK, Europe and some of the notable Asian nations, continues to fuel fears of renewed lockdowns in several countries. As per the latest report, the number of global COVID-19 cases exceeds 80.7 million as of Dec 28. In the meantime, the Sino-US tensions keep challenging the market risk-on tone, and this has become a key factor that is helping the gold prices to stay bid. In the absence of any key data/events on the day, the market traders will keep their eyes on the risk catalysts, like geopolitics and the virus woes.

Daily Support and Resistance
S1 1,879.46
S2 1,879.46
S3 1,879.46
Pivot Point 1,879.46
R1 1,879.46
R2 1,879.46
R3 1,879.46

GOLD prices are trading bullishly at the 1,890 level, and facing immediate resistance at the 1,899 level. On the lower side, the support remains around 1,886, and violation of this level could extend the selling bias until the next support area of 1,879. The MACD and RSI are supporting a bullish bias, thus, we can expect bullish trading in GOLD over 1,879 today. Good luck!