Daily Brief, December 31 – Everything You Need to Know About Gold Today!

The GOLD prices closed at 1,894.41, after placing a high of 1,894.43, and a low of 1,875.97. GOLD prices rose for the second consecutive day on Wednesday, amid the broad-based weakness of the US dollar, while the global rollouts of the coronavirus vaccine and increased risk appetite limited the upward trend. Despite a delay in the US stimulus checks, the top US Republican leader decided to postpone a Senate vote on increased pandemic relief payments. The US Dollar Index almost dropped to a three-year low, falling under 89.52 on Wednesday, boosting the GOLD prices in turn.

The weakness of the greenback was a result of traders shrugging off Republican Senate Majority Leader Mitch McConnell’s decision to delay a vote on increasing coronavirus relief checks to $ 2,000. GOLD is seen as a hedge against the inflation and currency debasement likely to result from large stimulus measures, and this drove the yellow metal higher on Wednesday.

The US Dollar Index fell to its lowest level since April 2018, as US stocks rose on the hopes of additional fiscal stimulus and optimism over vaccine rollouts, as Britain became the first country to approve a vaccine developed by AstraZeneca and Oxford University. The vaccine provides almost 62% immunity against the coronavirus with the first shot and 90% immunity with the second shot. The report that a cheaper vaccine can also be used to prevent infection with the coronavirus raised hopes for global economic recovery and supported the risk sentiment in the market. The rising risk sentiment, however, capped any further gains in the yellow metal prices on Wednesday.

On the data front, at 18:30 GMT, the Goods Trade Balance from November came in, showing a drop to -84.8B, against the expected -81.5B, which weighed on the US dollar and supported the GOLD prices. The Prelim Wholesale Inventories from November also dropped, achieving just 0.1%, compared to the forecast of 0.7%, which boosted the greenback. At 19:45 GMT, the Chicago PMI for December was released, indicating a rise to 59.5, against the predicted 56.6, which supported the US dollar. At 20:00 GMT, the Pending Home Sales for November came in at -2.6% – a drop from the expected 0.1%  – which put pressure on the US dollar and added further to the gains in the yellow metal prices.

Furthermore, the US dollar was also weak across the board as the number of coronavirus cases continued to soar globally. The first case of a new variant of COVID-19 was also diagnosed in the United States, putting further pressure on the local currency and helping the safe-haven commodity, GOLD, to rise higher on Wednesday.

Daily Technical Levels
Support               Resistance
1,875.24              1,890.94
1,867.57              1,898.97
1,859.54              1,906.64
Pivot Point:        1,883.27

The GOLD prices are trading sideways at the 1,881 level, and facing immediate resistance at the 1,885 level. On the lower side, the support remains at around 1,874, and violation of this level could extend the selling bias until the next support areas of 1,870 and 1,858. Conversely, a bullish breakout at the 1,885 level could lead the GOLD price towards 1,896. Good luck!